Print Paper Pendulum: Group Pressures and the Price of Newsprint [Reprint 2022 ed.] 9781978811249

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RUTGERS STUDIES IN HISTORY: N U M B E R

Print Paper Pendulum Group Pressures and the Price of Newsprint

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Print Paper Pendulum Group Pressures and the Price of Newsprint

By L. E T H A N E L L I S

New Brunswick RUTGERS UNIVERSITY 1948

PRESS

COPYRIGHT I 9 4 8

BY

T H E TRUSTEES OF RUTGERS COLLEGE IN N E W JERSEY ALL RIGHTS RESERVED

M A N U F A C T U R E D IN T H E U . S. A.

To Lewis M. and Catherine H . Ellis

PREFACE T H E F O L L O W I N G narrative is a case study in business pressures. The newspaper publisher has naturally sought cheap raw material. The newsprint manufacturer has naturally tried to pay dividends to his investors. The inevitable frictions have arrayed the two interests on opposite sides of a long series of controversies. The story takes the form of successive swings of the pendulum. Short periods of high-priced newsprint, made possible by national emergency, tariff favors, or manipulation among manufacturers, have had double consequences: on the one hand, heavy profits have brought large increments of new investment capital into the business, with consequent periods of overproduction and low prices; on the other, high prices have organized publishers into vocal pressure-groups to correct alleged abuses to the end of securing cheaper paper, usually with satisfactory results. These pendulum swings have occurred against a background of shifting areas of supply, of changing tariff policy, and of a revolution in the scale and organization of production. It is this story, against this background, which the author has tried to tell. Any success he may have achieved is, as always, shared with others. The Rutgers University Research Council provided him with a semester of that uninterrupted time so essential to research, and has likewise supported the publication of the study. The American Newspaper Publishers' Association made available otherwise inaccessible material in its files. Mr. Royal S. Kellogg, of the News Print Service Bureau, long a generous purveyor of assistance to anyone manifesting an academic interest in the newsprint industry, has read and criticized the entire manuscript. Mrs. Dale A. Harris spent a fair share of a warm summer struggling with the typing of the manuscript. Why wives should be appended, as a sort of vii

viii

PREFACE

afterthought, to lists of acknowledgments, escapes this author. Bowing to this custom he puts last, but by no means least, Elizabeth Breckenridge Ellis, who patiently observed the evolution of this study. L . Ethan Ellis Rutgers University September, 1947.

CONTENTS Page I

The Product and the Problem

3

The Woodpulp Era, 1878-1897

10

III

The Issue Joined, 1897-1907

18

IV

The Tariff Battle Opens, 1908-1909

39

Tariff Battle: Conclusion, 1910-1913

69

World War and Aftermath, 1914-1921

90

II

V VI VII VIII

Overproduction and Depression, 1922-1929

125

Efforts to Combat Depression, 1929-1936

142

Notes

172

Bibliography

203

ix

CHAPTER

I

T h e Produit and the Problem

N

as the term will be used in the following narrative, is a wood pulp paper which came into general use in the United States in the 1870's. It combines mechanical pulp, made by a process developed in Germany in the 1840's and used first in this country in the late 1860's, with chemical pulp, made here in the 1880's, in the ratio of approximately 80 per cent wood pulp to 20 per cent chemical pulp. Both processes were originally patented, but this protection expired before large-scale production became a fact. Inertia and prejudice slowed the adoption of the new article. Once it gained a foothold, however, it rapidly displaced paper made from rags and straw in supplying newspaper publishers, who were forced to seek a cheaper medium for their hungry readers.1 EWSPRINT,

A brief description of manufacture will introduce the reader to many of the terms which appear in the story to follow. The process, while subjected to many refinements and repeatedly speeded up, has remained basically unchanged. Spruce has proved the most adaptable of several usable varieties of wood. This has profoundly influenced the geographical, economic, and political aspects of the industry. The location of large stands of spruce in proximity to abundant water power first led to the establishment of newsprint mills in the northeastern United States. When overcutting reduced the timber available, the domestic industry moved westward as far as Wisconsin. With further decrease in the supply, Canada's enormous 3

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resources were tapped. However artificial the boundary in an economic sense, utilization of Canadian wood has introduced questions of import and export restrictions, of conservation, and of business organization which have greatly affected the delicate balance between supply and demand which it is the purpose of this study to examine. In the making of mechanical or groundwood pulp the logs, cut into bolts and barked or "rossed," are forced hydraulically against grindstones revolved rapidly by water or electric power. The resultant fibers are short and stiff .and in addition to the useful cellulose retain the original components of the wood. The fibers, suspended in the water played over the stones during the grinding process, are screened to remove large particles; and if the fiber is to be used in a converting mill (one which does not manufacture its own pulp, but converts into paper pulp produced elsewhere), it is dried into sheets or "laps" and stored pending shipment. In the so-called integrated mill, manufacturing both pulp and paper, the screened pulp, still mixed with water, is stored in tanks until needed. Economical operation of this process depends upon the close juxtaposition of large amounts of wood with cheap and abundant water power, since at normal paper prices steam grinding has been prohibitively expensive. A chemical process provides the long-fibered sulphite pulp which combines with the mechanical variety into a paper strong enough to survive the high-speed operation of modern newspaper presses. The wood, reduced to small chips, is placed in a brick-lined steel "digester" where it is cooked under pressure for several hours with a liquor made by sending sulphur dioxide gas through a tower packed with wet limestone. This cooking removes the lignin and other soluble constituents of the wood and leaves a practically pure cellulose fiber ready for screening and drying, or for wet storage if the fiber is for immediate use.

THE

PRODUCT AND T H E

PROBLEM

5

In the actual making of newsprint the two types of pulp are combined in the proper proportions. If the paper is being made in a converting mill, the dried laps must first be mixed with water. In the integrated mill both groundwood and sulphite pulps are stored in tanks until needed, then blended and pumped to the paper machines in a mixture containing only one-half of one per cent solids. This machine, usually of the Fourdrinier type, begins with an endless belt of finely woven bronze wire, from 70 to 100 feet in length and from 164 to 304 inches in width, carried over rollers at speeds from 800 to 1600 feet per minute. From this point the paper making process consists of removing the water from the pulp. This is accomplished by gravity, suction, pressure, and heat. A considerable amount of water escapes through the wire mesh; more is drawn out by a series of suction boxes beneath the screen. By the time it leaves the screen, the mixture is strong enough to be carried to blankets running between rollers which reduce the water content to 70 per cent. Other rollers, heated by steam, remove more water; still others called calendars impart a smooth surface. Within a few seconds the watery mixture has traveled 300 feet through the machine and emerges as newsprint to be wound on reels preparatory to being slit to proper width and rewound on the cores which will carry it to the presses.2 In the early stages of the story the newsprint consumed in this country was made from home-grown wood and homemade pulp. Presently, with demand increasing and local supplies declining, imported pulpwood, on which there has never been an import duty, began to supplement the domestic article. These trends persisting, foreign pulp began to come in over gradually lowered tariff barriers. T h i s shift was stimulated by shrewdly designed export restrictions by the principal Canadian producing Provinces upon pulpwood cut from the Crown lands, which Dominion law left under provincial juris-

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diction. T h e next result of the increasing demand, the lowered domestic tariffs, and the provincial export restrictions was to move an ever-larger proportion of pulp manufacture across the northern border. Next sustained consumer pressure first reduced and then removed the tariff on newsprint. This and other factors, induced a rapid expansion of the Canadian paper industry, which overtook and passed that of the United States in 1925-1926. In the later stages of the story the problem has become one of dividing the market (at times a shrinking one) between the relatively declining domestic production and the growing Canadian manufacture, often produced and marketed at a low margin of profit, which constituted a danger to the domestic producer. T h e circumstances briefly outlined above may have suggested that questions of supply and demand were likely to play an important role in the story of newsprint paper. It is the repercussions of these factors which this study proposes to examine from the time when wood pulp paper became a factor in the 1870's until the depression of 1929 disappeared into the war clouds of the later 1930's. T h e protagonists are two: on one hand the manufacturers of pulp and paper, operators of extensive and expensive properties whose stockholders expected dividends and who therefore desired a maximum price for their output; on the other, the consumers of this output, the newspaper publishers of the United States who looked to secure the cheapest possible supply of their raw material, newsprint. This statement of objectives will indicate the antithetical position of the two groups: if the publisher gets cheap paper the manufacturer's profits are less. In the light of the antithesis, the question of supply and demand looms large. A n abundant supply puts the consumer in the enviable position of being able to bargain with competing suppliers; a short supply, especially when combined with a sudden or excessive

THE

PRODUCT AND T H E

PROBLEM

7

demand, enables the producer to reap the profits of a panic market. T h e solution of the problem, if there be one, must be found in terms of price. Ideally, this would be one which provided the publisher with cheap paper at a profit to the manufacturer. 8 In practice such a happy medium is extremely difficult of attainment. H u m a n nature being what it is, the publisher's idea of cheap paper tends, in the producer's view, to be priced below all reason; conversely, the producer's idea of a proper margin of profit tends to savor of extortion to the publisher. T h e result has been a series of pressures exerted by both groups to attain their ends. When feasible the producer has sought tariff favors at the hands of government. When placed on the defensive in this respect, he has tried to avert the withdrawal of such favors already received. F r o m time to time he has resorted to collusive action to raise or to maintain the price level to his own advantage. T h e same objective has on other occasions been sought by combinations among producers. When opportunity offered, rigid contract terms have been imposed upon purchasers. F r o m time to time efforts, not too successful, have been made to raise prices by controlling output. It has been the producer's misfortune that many of his protective devices have run counter to currents of popular thinking, rendering him vulnerable to attack by a canny adversary. Thus, efforts at combination coincided with popular sensitiveness to violations of the anti-trust laws. Again, general hostility to protectionism in the early years of the present century helped to strip away this bulwark of the industry. T h e producer, therefore, may claim to have been waging a defensive battle against those who would make it difficult for him to make a living, as well as against those natural forces which have rendered his business a difficult one through the diminution of his raw materials.

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Per contra, the consumer has pointed to aggressive actions by grasping capitalists, intent upon paying dividends on swollen stock issues. H e has charged producers with trying to shelter an adult industry behind a tariff wall constructed to protect an infant. H e has asserted that there were deliberate violations of the country's anti-trust laws as a means of extracting further tribute. In this series of controversies the consumer has, by and large, found himself in a favorable position. H e is among the most vocal of his countrymen. His publications offer a sounding board from which to air his views much more effectively than any available to an opponent. His organization, the American Newspaper Publishers' Association, is one of the most effective of pressure groups, to whose desires official Washington gives careful if sometimes unwilling heed. Its leadership in the crucial stages of the story about to be unfolded was active and energetic to a point bordering at times on fanaticism. The resultant interaction of the factors sketched above has been a series of episodes, extending over many years, in which publishers and manufacturers have generally been arrayed in opposition. The publishers, intent upon securing cheap newsprint, have taken advantage of every opportunity to bear the market. Circumstances have frequently assisted them. Every national crisis or swing of the business cycle which brought a temporary shortage of paper and consequent high profits has enticed large new aggregates of capital into the newsprint field. This in turn has brought overproduction, competition, and low prices. Consumers have been alert to manufacturers' efforts to overcome these disadvantages. When short supply or sudden demand created high prices, publishers have typically struck with whatever weapon was convenient. Not infrequently they have anticipated a rise and have sought to discount it in advance by aggressive measures of their own. Drives for tariff removal and prosecutions under the anti-

THE

PRODUCT AND T H E

PROBLEM

9

trust laws aided in lowering prices over a period of years, in part by opening the way to imports from Canada. H a v i n g achieved free trade in paper and its materials, publishers directed their attention around 1920 to removing Canadian export restrictions likely to contribute to shortage and high prices. T h e N I R A was attacked as an instrument of monopoly in the 1930's, largely because of its price-raising potentialities. In the intervals, when overproduction forced prices down, publishers' activity was less noticeable Whether because of natural factors or the policies of publishers, periods of declining prices have occupied by far the greater share of the years since 1875. A brief flurry in 18791880 was succeeded by a long decline until 1897-1898. Formation of the International Paper Company and other factors then raised prices briefly until about 1900, followed by a drop until late in 1903. Another drop followed until the year beginning in October, 1906, when a rise began which was terminated by the Panic of 1907. This ushered in a period of decline lasting until a war-induced boom in 1 9 1 6 - 1 9 1 7 and a postwar boom from 1 9 1 9 1 0 1 9 2 1 . T h e market then remained in the buyer's hands from 1922 until the mid-i930's. Each of these periods of rising prices finds publishers actively trying to reverse the trend. It is to the examination of the repercussions of publisher-manufacturer relations upon the problem of supply and demand that the narrative now turns.

CHAPTER

II

The Wood-Pulp Era, 1878-1897

T

introduce a number of elements important in the newsprint story but bring few of them to a conclusion. Changing production processes, greatly increased demand, overproduction, falling prices, tariff legislation, and efforts at combination as a defense against low prices all enter the picture. T h e 1880's witnessed the completion of the shift to wood pulp newsprint, and the end of the decade found the country ready for a phenomenal boom in newspaper publication and circulation. 1 T h e turn of the new decade also brought the first of the series of swings to high prices which, with increased demand and the advantages of the new paper, brought new money into the industry and contributed to overproduction and a long price decline lasting well into the 1890's. This continued price depression finally brought the manufacturers to consider combination as a remedy, and toward the end of the period moves to this end were fairly well advanced. This sets the stage for a more active policy by the publishers, which developed in 1897. Tariff legislation and the emergence of Canadian interest in the pulp and paper problem make 1897 a focal point in the story. Meantime, several minor chapters of tariff history, devoted mainly to wood pulp, must be noted in order to provide a setting for the tariff battle which develops after 1900. HESE YEARS

W h i l e wood-pulp paper was taking possession of the news-

T H E WOOD-PULP ERA, 1 8 7 8 - 1 8 9 7

II

print market in the 1870's, paper makers found themselves in increasingly difficult straits because of overproduction. Effects of the Panic of 1873 persisted until well toward the end of the decade, and on August 28, 1878, the desperate manufacturers gathered at Saratoga Springs, New York, and formed the American Paper Makers' Association.2 Co-operative effort to tailor production to demand seemed the logical suggestion, and the convention adopted a proposal to reduce it by one-sixth for a six-month period. This was brought to naught by the unwillingness of some mills to carry out the scheme.8 Gloomy forebodings were temporarily dispelled, however, by the appearance late in 1879 of a short but definite boom. Prosperity seems to have returned with a vengeance and found manufacturers so lacking in raw materials as to cause a short supply and give the producer control of the market. Prices went up from five or six cents to ten cents per pound by March, 1880.4 It would probably be incorrect to attribute the next decade and a half of overproduction and declining prices to this boom alone; an expanding market, wider use of wood-pulping machinery (the patents on which expired in 1884), and the improvement of the national economy after the Panic of 1873 each played a part. Overproduction and declining prices did develop, however, and the prompt and vigorous reaction of publishers to the brief spell of high prices clearly indicates their sensitiveness to any change unfavorable to them in the balance of supply and demand. This sensitiveness was first reflected in a rash of bills introduced into the second session of the Forty-Sixth Congress (December, 1879—June, 1880) proposing to lower or remove the duties on pulp, newsprint, and their constituents.5 By February, 1880, the matter had reached a stage of maneuvering which, while terminating without specific legislative action, ties in with the general contemporary concern over the tariff and brings out some interesting sidelights on the news-

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print situation. The initiative came from metropolitan publishers in New York and Chicago, some of whom seem to have held free-trade sentiments and others to have been interested merely in cutting prices. The drive was spear-headed by George Jones of The New York Times and Erastus Brooks of The New York Express, the latter claiming to speak on behalf of eight thousand newspapers.® The most promising approach was an attack on the duty on wood pulp, the process being still under patent and hence vulnerable as a monopoly. "Dried pulp" had been protected by a duty of 20 per cent ad valorem under legislation going back to the Act of July 30, 1846, and continued by subsequent enactments.7 This provision, inserted in a general list of items, obviously could not apply to wood pulp, since that product had not been in existence in 1846. On March 13, 1872, however, Secretary of the Treasury George S. Boutwell of Massachusetts (in which state the paper industry then centered) had ruled that wood pulp was dutiable under the "dried pulp" provision of the Act of March 2, 1861. The obvious inference was that Boutwell had interpreted the law broadly in favor of his compatriots. The injustice, it was urged, could be rectified by a proper interpretation of the Act of July 14, 1870. This being unlikely of attainment, it was proposed to amend the tariff by a bill introduced by Fernando Wood on March 8, specifically declaring wood pulp free of duty.8 This proposal launched the Committee on Ways and Means on a series of hearings during which the wood-pulp question became involved in the problem of general tariff revision, which Congress was not yet willing to undertake. The net result, therefore, was the rather thorough airing of the matter, and the retention of the duty on pulp, a manufacturers' victory, credit for which was for many years modestly arrogated to himself by Warner Miller, of Herkimer, New York. Miller, a colorful character who with William E. Russell of

THE

WOOD-PULP

ERA,

I 87 8—I 8 9 7

13

Massachusetts had played an important part in the development of wood-pulp manufacture, was then a member of Congress, as was Russell. Both appeared before the committee in opposition to Jones and Brooks, denying the charges of monopoly and urging that removal of the duty would ruin the industry.9 So cogently did Miller argue, and so obvious was his own interest in his argument, that he was known as "Wood-pulp Miller" to the end of his days. Henceforward wood pulp becomes increasingly entangled in the larger tariff story. It was a period of considerable public concern with the question, and this particular session became a battleground between two points of view as to the best approach to tariff revision, one group favoring piecemeal change and another a full-dress revision. The publishers evidently preferred the piecemeal technique, feeling that their scheme would thus be more likely to succeed. Representative Richard W . Townshend of Illinois introduced by subterfuge a general revision bill, and in the wrangle which followed, any opportunity for action on the Wood bill was lost, though at one stage seven of the thirteen members of the Ways and Means Committee were said to favor it. Presently the end of the session approached, a presidential election was in the offing, and the tariff question was shunted off into discussion of a commission to investigate the whole matter. From the evidence available it would appear that credit for saving the manufacturers' protection at this point should be divided between Miller and the general political situation.10 The brief flurry of prosperity of 1879-1880 gave way to an unbroken era of overproduction and increasingly unrestricted competition. Sporadic efforts to balance production and consumption received short shrift from the producers, and by 1887 the manufacturers' association went on record as being opposed to control of wages, hours, or prices.11 As the Pafer Trade Journal's annual résumés of the years succeeded

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one another, the refrain became a monotonous one: too much paper for the market to consume j too many mills in production} too much new money going into paper manufacture; new lows in price from year to year. A typical statement must suffice. Loren Allen, reporting to the News Division of the Paper Makers' Association in August, 1889, voiced this dirge: " w e find things in an unsatisfactory condition, no unanimity of opinion and little or no disposition to work in concert to better the outlook. Each manufacturer seems to think he is as wise as his neighbor and proposes to seek his fortune in his own way, regardless of consequences to others. Ruinously low prices and overproduction are the reports from all quarters . . , " 1 2 Things being as they were, it was not at all unnatural that thoughts turned again to combination and consequent curtailment of production. T h e rather sketchy evidence points to two separate efforts in this direction prior to 1897. T h e first developed over several months during 1893-1895, and seems to have taken the direction of a trust arrangement, the Knight case having demonstrated the weakness of the Sherman Act. 13 By December, 1896, a second scheme, in the form of an agency to control the sales of mills turning out 1300 tons of paper daily, was reported on the point of consummation, but it failed to materialize. 14 Thus as 1897 opened the groundwork had been laid, in excessive output, low prices, and unsuccessful efforts to combat these evils, for a third try which brought the International Paper Company into being early in 1898. Meantime, some tariff changes had been registered since the flurry of 1880. These are minor in themselves and mainly important as regards wood pulp, since little or no newsprint was being imported prior to 1897. T h e y must, however, receive some attention as background, since the question was to become a principal battleground of the conflicting interests of

T H E WOOD-PULP

ERA, 1 8 7 8—1 897

15

publishers and manufacturers. It is perhaps worthy of note that pulp and paper received such slight attention in view of the importance of the tariff in national politics in the 1880's and 1890's. This is perhaps to be explained by the fact that cheap paper made it unnecessary for the publishers to force the issue, while the manufacturers, placed on the defensive in 1880, were not in a position to do anything aggressive and in fact agreed to reductions in order to avoid antagonizing the publishers. T h e manufacturers' next warning of impending danger appeared in the report of the Tariff Commission, rendered to Congress in December, 1882, which precipitated the debate resulting in the so-called Mongrel Tariff of March 3, 1883. This report recommended the free-listing of pulpwood and wood pulp, 15 but the Act was less severe, free-listing wood, levying 10 per cent ad valorem (a reduction from 20 per cent) on pulp and 15 per cent (down from 20 per cent) on unsized newsprint. T h e debates throw no light on this action, but Miller (now a Senator) in later years asserted that he counselled congressional committees in favor of both reductions. 18 Grover Cleveland's forthright tariff stand forced the issue upon Congress, and the debate on the Mills Bill of 1888 furnished the most thorough airing of the question in many years, though failing to eventuate in legislation. There is no evidence of publishers' activity before committees of either House. T h e manufacturers were more active, rather trying to hold the line against reductions than to raise the rates, as if fearful of antagonizing the press. A s introduced in the House the bill proposed to free-list wood pulp and to cut the 15 per cent ad valorem rate on unsized newsprint to 12 per cent, a 20 per cent reduction. T h e House sustained the committee on newsprint, but the Senate substitute, introduced as a political weapon in the 1888 campaign, restored the rate to 15 per cent. Although Mills proposed to free-list pulp, sufficient

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pressure was exerted to induce retention of the 10 per cent rate of 1883 in the House bill, and the only change was an amendment adopted in the Senate changing the duty to a specific one of $2.50 per ton, a slight reduction. Neither House nor Senate proposal was enacted, and there was relatively slight interest in the matter. 17 T h e McKinley Tariff of October 1, 1890, continued newsprint at the 15 per cent ad valorem level established in the Act of 1893, but changed the 10 per cent rate on mechanical pulp to a specific one of $2.50 per ton. This increased the actual levy somewhat and brought out a difference of opinion between the importers of wood pulp and the domestic producers. T h e importers, who had been bringing chemical pulp from Europe and evidently profiting by undervaluing it at the customs, desired the product free-listed, or kept on an ad valorem basis. T h e domestic producers, subjected to what they considered unfair competition by virtue of the undervaluation, preferred the specific duty, which went into the bill. T h e McKinley Act also for the first time made a distinction between mechanical and chemical pulp, levying $6.00 per ton on the unbleached sulphite which entered somewhat into the production of newsprint. These differences were brought out in the hearings before the W a y s and Means Committee, and there was little debate on the matter in either House. 18 Before the next tariff legislation, the Wilson-Gorman Act of August 27, 1894, the paper trade had momentarily reflected the prosperity of the early 1890's and more permanently the panic of 1893. 19 T h e Wilson Bill passed the House without mention of pulp or paper in the debate, carrying newsprint at 12 per cent ad valorem (down 3 per cent from the McKinley level) and returning both mechanical and chemical pulps to 10 per cent. T h e Finance Committee reduced the news rate to 10 per cent at one stage, but by the time the section was adopted it was back to the McKinley

T H E WOOD-PULP ERA, 1 8 7 8 - 1 8 9 7

17

level of 15 per cent, at which it went into the law without debate. The pulp question again aroused some interest. A number of domestic manufacturers urged retention of a duty specific in type, and Senator William P. Frye of Maine put this request in the form of an amendment to the bill which would have left the rates as they were in the McKinley Act. H e was joined by Jacob H . Gallinger, of New Hampshire, who asserted that the change to ad valorem would lower the duty, because of the depressed price of the product, and so work a hardship on the producers. Their arguments were unavailing, however, and the 10 per cent rate prevailed.20

CHAPTER

III

T h e Issue Joined, 1897-1907

S

important developments characterized the decade opening in 1897. An initial tariff skirmish gave the manufacturers an advantage, as did the formation of the International Paper Company early in 1898. These events, together with the higher prices accompanying a boom in 18971898, warned the publishers that they must guard their interests. The year 1897 a ^ so s a w the appearance of one of the most colorful figures in the newsprint controversy, that of John Norris, who was to become the nemesis of the manufacturers, teaming with the Publishers' Association in a partnership which eventually sealed the doom of protection on newsprint. A brief period of high prices after the formation of the International was followed by another decline until late in 1903. The policies of the manufacturers then determined the publishers on an active campaign. The next year, 1904, they spent in sparring for an opening, there seeming to be some doubt as to whether it would be best to proceed under the anti-trust acts or by revision of the tariff. Eventually both plans were followed, and by 1907 a full-scale assault was launched, with overtures being made to all branches of the government in an effort to secure the publishers' desires. Against these domestic developments must be considered an increasing Canadian interest in the problem. EVERAL

The initial round was fought at a hearing of the Ways and Means Committee on December 31, 1896. Prior to this the manufacturers at a New York session had formulated their

THE

ISSUE J O I N E D ,

1897-I9O7

19

wishes, including maintenance of the existing rate on newsprint and a return to specific duties of $2.00 on groundwood and $4.00 on unbleached sulphite. These were lower than the McKinley duties, but somewhat above the existing level.1 At the hearing John Norris projected himself into the proceedings, which took on "a character not entirely looked for." Norris was at the time business manager of the The New York World, which used, according to his assertion, one-thirteenth of the total newsprint tonnage consumed in the United States. He asserted at this point that he appeared neither for the World nor for publishers generally, but as an individual who felt the need to inform the committee "of the fact that the newspaper manufacturers of the United States have perfected their arrangements for a combination by which every newspaper shall be at the mercy of a central selling agency and by which the price of newspaper shall be raised, and by which these gentlemen shall derive an additional profit of from five to six million dollars a year out of their investment, and thereby tax knowledge and diminish the educational possibilities of the newspaper press . . 2 Norris' statement to the committee was his first lengthy public exposition of a point of view which was to be reiterated many times, and of a technique compounded of fact, halftruth, and innuendo which he developed by constant use over many years into a theme with variations—the ill-intent of the manufacturers of newsprint toward the consumers of their product. He raised the bogey of combination, alleging that even as he spoke arrangements were all but completed for a union of Eastern mills through a selling agency to raise the price of news to two and one-half cents per pound (it was then, he said, about two cents). He suggested the complete removal of the duty on newsprint. This, he argued, would prevent the fruition of the combination by subjecting its members to the competition of the exhaustless forests and water power

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of Canada, while at the same time contributing to the conservation of our own natural resources. When pressed on particular points he took refuge in the statement that he was merely furnishing information, which could be used by the committee as it saw fit. H e denied that removing the tariff would also remove the industry to Canada, asserting that it would merely check the possibility of higher prices through monopolistic control. H e doubted the efficacy of the combination, if formed, giving it as his opinion that high prices would drive publishers into manufacturing, with a restoration of low prices through competition. Miller and Russell replied on behalf of the manufacturers. Russell with some asperity denied the fact of combination or the intent of any possible combination to raise prices. Under questioning, he and Miller sketched the two plans of co-operation already mentioned, indicating that the first failed because of inability to reach agreement upon the valuation of property involved and asserting that the second, or salesagency plan, while the subject of prolonged negotiation, had accomplished nothing and was not expected to do so. Miller claimed that the manufacturers had practically dared the publishers, if these feared higher prices, to make contracts "at the present rates for five years or for all time to come." Before the introduction of the Dingley Bill on March 18, 1897, Norris had carried his fight before the American Newspaper Publishers' Association and enlisted its influence in behalf of his project, albeit not without misgivings on the part of some members.® Rehearsing his appearance before the Dingley committee, he asserted that this group had decided to recommend a duty of $1.65 per ton on mechanical pulp, which would increase the cost of paper by five cents per hundredweight. H e then moved "That a committee of three be appointed to secure the abolition of the duty on pulp and paper." This evoked conflicting sentiments among those present, some

T H E ISSUE JOINED,

1897-I9O7

21

feeling that papers which had just gone through the McKinley campaign advocating the protective principle might balk at asking favors for their particular interest. His motion carried, however, and he was chosen chairman of the committe constituted under it. The scene now changes to Washington, where the Dingley Bill progressed to passage against a background of overproduction, low prices, and anxious Canadian interest in the development of American tariff policy.4 Debate opened on March 22, 1897. The committee proposed 15 per cent ad valorem on newsprint (the Wilson-Gorman rate) and a return to a specific levy on mechanical pulp, placed at onetwelfth of a cent per pound or $ 1.67 per ton, as had been forecast by Norris. The House debate produced no discussion of these proposals, and the bill passed as introduced.6 At this juncture some brief notice should be paid to the development of Canadian policy. By this time, of course, much United States paper was being produced from Canadian pulpwood, which had so far been subjected to no limitations in its movement across the border. The interest of American pulp manufacturers in continuing this situation is fairly obvious. The inroads of the mills on the forests were already causing suggestions, rather precocious, it is true, that perhaps our supplies of spruce might not be inexhaustible.® Free access to Canadian spruce would postpone, if not avert, the evil day. On the other hand, some Canadians were already thinking that part of the profits of pulp-making would look well on Canadian bank balances. At least as early as 1893 they were urging their government to place an export duty on pulp and logs with the object of forcing American capital into Canadian pulp manufacture. The issue arose again in 1896 and became a bone of contention in the political campaign which brought Sir Wilfrid Laurier to power as head of a Liberal Government in June.7 While the Dingley Bill was before the House, Lau-

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rier's group was also formulating a tariff under the influence of conflicting points of view on the matter of an export duty on pulpwood. The early tendency seems to have been to resist pressure to impose the duty, perhaps because the Government was still hopeful of inducing the United States to enter reciprocity negotiations.8 The bill introduced in April indicated that the Government had apparently abandoned the idea of reciprocity, but sensitiveness to American reactions, or possibly a desire to bargain, produced a bill without restrictions on pulpwood exportation. As the Dingley Bill progressed through the Senate and it became increasingly likely that it might contain provisions inimical to Canadian interests, the pressure increased and early in June Finance Minister William S. Fielding gave notice that the Government would ask for power to impose an export levy on logs, pulpwood, and some ores, though at the same time he insisted that there was no intention of applying the duties immediately if permission were accorded.8 Parliament granted the Government permission to impose the export duty in the tariff act, which passed about the same time that the Senate was adopting the paper section of the Dingley Bill, with new provisions to be noted below which contained a threat to Canada. There is little doubt that both arrangements contained an element of potential threat.10 As introduced in the Senate May 4, the pulp section was amended. In Paragraph 390 mechanical pulp was subjected to a duty of seven and one-half cents a hundredweight or $1.50 per ton as against the $1.67 of the House bill. A retaliatory proviso was attached: "That if any country or dependency shall impose an export duty on pulp wood, the amount of such export duty shall be added, as an additional duty, to the duties herein imposed upon wood pulp, when imported from such country or dependency." The newsprint section continued the House rate of 15 per cent ad valorem. T h e pulp proposal

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passed the Senate with but a single voice raised in dissent, George G. Vest of Missouri objecting to loading the consumer with a double burden. Before passage the newsprint section also received a proviso, on motion of William B. Allison of Iowa, "That no such paper shall pay a less rate of duty than three-tenths of 1 cent per pound." This, said Allison, was the equivalent of 15 per cent ad valorem. It changed the duty from ad valorem to specific and placed it at a minimum of $6.00 per ton. It was this action which threw the paper section into conference and may be taken as the forerunner of what happened to it in the Conference Committee.11 On July 21 the Senate considered the Conference Committee report. The pulp section came in essentially as it had originally passed the House, with the duty increased to $1.67 per ton. The paper section was altered in such fashion as to bring charges, at the time and later, that there had been manipulation in the committee to raise the paper duty for the benefit of the manufacturers. As reported, and as it eventually went into the Act, Paragraph 396 carried a sliding scale of specific duties beginning with three-tenths of a cent per pound on newsprint, valued at not over two cents per pound, five-tenths of a cent on that valued above two cents and not above two and onehalf cents, and so on. A retaliatory proviso also appeared for the first time at this point: "That if any country or dependency shall impose an export duty upon pulp wood exported to the United States, there shall be imposed upon printing paper when imported from such country or dependency, an additional duty of one-tenth of 1 cent per pound for each dollar of export duty per cord so imposed, and proportionately for fractions of a dollar of such export duty." In reporting to the House, Dingley asserted that the new specific duty was set "at the same equivalent ad valorem rate that passed the House, and the same rate as in previous tariffs . . The committee was attacked in the Senate because of the

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addition of the provisos, unique in the pulp and paper paragraphs of the bill, on the ground that it had inserted new legislation (the retaliatory proviso regarding paper), and because it was alleged that the change to a specific levy, plus the proviso, would work an increase in the paper tariff. This last charge was based upon the current price of paper. The $6.00 per ton minimum would be equivalent to 15 per cent ad valorem on paper selling at $2.00 per hundredweight. It was alleged later, however, that the average price of paper was $1.75 in the East and that the New York papers were getting their paper for $1.65 delivered. On this basis the $6.00 specific rate would conceal a substantial increase favorable to the mill men.12 Allison insisted, however, that careful cost analyses, based on customs valuations, indicated that the sliding scale proposed by the committee was equivalent to slightly less than 15 per cent ad valorem, and the conference report was accepted.13 Thus the tariff warned Canada against interfering with the free passage of pulpwood across the border, raised the rate on wood pulp and newsprint, and put the publishers on notice of a change in the situation. Rising prices in the autumn of 1897, the formation of the International Paper Co. early in 1898, and its temporary influence in maintaining these prices further warned them that an issue was appearing." While Congress busied itself with the tariff, the newsprint market was the prey of "the most intense competition and lowest prices for newspaper ever seen . . during the first half of 1897. Prices stiffened during the autumn, and by mid-April of 1898 a swing to a seller's market had taken place, a swing which preceded the abnormal conditions produced by the Spanish-American War. 15 The swing was very welcome to a newcomer in the paper field, the International Paper Company, incorporated January 31, 1898, under the leadership of practical paper makers rather than promoters, guided principally by Russell. Originally composed of mills formerly

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owned by seventeen concerns, it soon absorbed most of the mills east of the Mississippi and controlled from two-thirds to three-fourths of the total newsprint output of the country. It was, in the words of a trade journal, "born of the fear of bank-ruptcy and ruin, as competition among the manufacturers had gone beyond all reasonable bounds . . ."; another exulted that "the war of price is over . . ." Per contra, the World, in caustic vein, charged the formation of a trust "to monopolize the business, raise the price of paper $8 a ton and levy a tax of not less than $4,000,000 a year . . . This is a conspiracy to tax knowledge, to levy tribute on education, to blackmail intelligence itself. Unfortunately the tariff duties aid the conspiracy. They not only prevent Canadian and other foreign competition in the sale of paper, but they exclude Canadian wood pulp. The free admission of wood pulp and paper would go far to crush the conspiracy. What is to be done about the matter? Will any attorney general enforce the laws, State or national, against such conspiracies in restraint of trade? Will Congress, seeing clearly that the paper and pulp duties thus aid and abet robbery, repeal those duties?" 16 This development was of course a challenge to the publishers. At the Association's annual meeting, February 18, John Norris took the floor to discuss Question 35 on the agenda: "The White Paper Combine. Is it a sure go, and will it necessarily be hostile to the interests of the newspaper publisher?" He answered the first part with an affirmative, and went into the story of the formation of the "trust," giving statistics to show that the new organization was badly overcapitalized, the member plants having been absorbed at a figure per ton of daily production out of all relation of the facts.17 He suggested, not too hopefully, that if the newspapers could be induced to unite, Congress might be persuaded to repeal the duty on unsized newsprint. At this point William Cullen Bryant, a member of the

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Board of Directors, interjected to report on an informal semisocial meeting between the board and representatives of the combine a few days earlier, at which mutual problems were discussed. T h e meeting was held at the instance of H u g h J. Chisholm, vice-president of the International, and the result, to Bryant's way of thinking, indicated that the prospects for co-operation between the two groups were not too dark; this would constitute a negative answer to the second half of the rhetorical question above. In fact, he asserted, the mill men had promised that "if any of you gentlemen wish to take any shares of stock in the company you will be taken in on the ground floor." Norris was considerably nettled, since he had not been invited or informed. A s on an earlier occasion, discussion disclosed differences of opinion among the membership, but again produced a motion for a committee, this time of five members, " f o r the purpose of guarding the interests of the A . N . P . A . in connection with the movement of the paper trust . . . " 1 8 Newsprint prices rose rapidly under the double impetus of the war and the manufacturers' combination, and whereas paper had been selling in 1897 for $1.60, by M a y , 1898, it was bringing from $2.25 to $2.40. T h e demand dropped sharply by mid-June, but by that time another forum was being prepared for rehearsal of the conflicting claims of publishers and manufacturers. 19 T h i s was the meeting in July of the Joint H i g h Commission, charged with ironing out a tangled series of Canadian-American problems, among them commercial reciprocity. This brought up the question of export restrictions, permission to levy which had been granted to the Laurier Government, but not exercised. This failure to act raised the alternative of independent provincial limitations; it also produced a division of domestic opinion, the pulp makers favoring restrictions and the frontier settlers, who supported themselves for a time by cutting pulpwood for export, being op-

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posed. The Dominion authorities, naturally, did nothing about imposing restrictions, in the hope of using this abstention as a bargaining instrument in possible reciprocity negotiations. As the time for the meeting approached, the pulp makers seemed to experience a change of heart, and in August the Canadian Lumbermen's Association adopted resolutions urging free importation in return for free exportation, i.e., that the United States should freely admit pulp and manufactured lumber if Canada allowed logs to leave the Dominion without restrictions.20 This produced immediate complications by allying the American lumbermen, opposed to the entry of manufactured lumber, and the American paper makers, opposed to the free entry of Canadian pulp. The Canadian pulp manufacturers seconded the lumbermen in mid-September in resolutions demanding an immediate export duty on pulpwood equal to the American import duty on pulp unless the United States remove her levies on both mechanical and chemical pulp.21 As the Joint High Commission's meetings approached futility, the Canadian position completed the circle and returned to support of export restrictions on the theory that the United States was dependent upon Canada for her supply and would have to buy anyway, regardless of the tariff on wood P ul P- 22 . Against this background the domestic interests waged another round of their battle, the story of which must be pieced together, since the Commission held its sessions in secret. Warner Miller addressed a session on September i , seconding the American lumbermen, who had argued against removal or reduction of protective duties. In December John Norris presented a brief, which went also to the press and all members of Congress, urging removal of pulp and paper duties as a means of combatting the paper trust. H e rehearsed the charges of overcapitalization made earlier, adding that many high-cost and inefficient mills had been taken into the combine

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at inflated values. January 7, 1899, Miller again appeared, amplifying his earlier statement and replying to Norris in particular. Since his first approach had proved unpalatable to some staunch Republican papers, Norris prepared another, based on the theory that tariffs should be removed to conserve American forests. This abandoned the tax-on-knowledge approach and made no mention of the ultimate objective of the publishers—removal of the tariff. It went to the Commission in January and was followed by a direct approach on January 30, when a deputation from the publishers met the President and the members of the Commission and presented a third brief compounded of the two earlier ones. There the matter rested, as the Commission presently broke up in disagreement.23 T h e next year, 1899, brought few developments in the domestic scene until a last-quarter price boom alerted publishers once more.24 Canadians further canvassed the problem of policy, with three possible courses of action receiving attention. Advocates of Dominion-imposed export duties on wood reminded themselves of the retaliatory provisions of the Dingley Act. A possible way of securing the same end without this involvement was suggested in a proposed sharp increase of the Dominion stumpage dues (levies on wood actually cut), with a rebate of most of these in the case of wood pulped in Canada. And, as before, the wood-producing Provinces toyed with the idea of local restrictions. Through it all there appears a growing concern with the problem, perhaps not entirely unconnected with an American drive to secure timber limits in Canada, and a rising feeling that Canada had come to command the situation through control of the raw material now becoming increasingly essential to the American paper mills. 25 T h e price boom of late 1899 stimulated the normal reaction: numerous legislative proposals, which slumbered in

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committee pigeonholes because of desire to avoid the general tariff discussion which their presentation would precipitate, and an investigative proposal suggested by the publishers at their annual convention in February. W . S. Hutchins, of the Washington (D. C.) Times, asserting that the best quotation he had been able to secure from the mills was between $2.75 and $3.00, added that he did not wish to invite a fight with the trust, but desired to know what could be done to better the situation. Responding, H. E. Baldwin of the Joliet (111.) News, introduced a resolution recording the Association's desire for removal of the tariff on wood pulp. The following discussion clearly indicated a continued difference of opinion. Finally the convention demanded an inquiry into the paper situation by a special congressional committee, particularly into the increase in price, commonly believed due to action of the trust. This, as Thurlow Weed once told William H. Seward, broke no eggs, but showed an anxious interest.26 The only other domestic development was the incorporation of the General Paper Company, a combination of twenty-six mills in Wisconsin, Michigan, and Minnesota, into a selling agency whose function was to eliminate competition in order to put the Western mills on a par with the International.27 In Canada the first-fruits of restrictive sentiment were found in Ontario's regulation forbidding the exportation of pulpwood cut from the Crown lands, under Dominion practice left under provincial jurisdiction. This was the first of a series of similar restrictions enacted over a period of years by the forest Provinces and is to be properly considered as a move brought about by the failure of the central government to take action. It was dictated by a sense of grievance against the retaliatory provisions of the Dingley Act and by a desire to stimulate the growth of a Canadian wood-pulp industry.28 A relatively quiet period followed until 1904. Prices started down under the impetus of new production, particularly that

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of the Great Northern Paper Co. which entered the market in November, 1901. T h e buyer soon regained control of the situation and with supply and demand more or less in equilibrium there was little incentive for the publishers to wage an aggressive campaign. John Norris kept in training for his marathon attack against the International Paper Co. by an appearance before the Industrial Commission in April, 1901, in which he added nothing to his previous arguments. In a refutation of Norris, President Chisholm freely admitted that a combination had been formed and that prices had gone up thereafter under pressure of rising costs. H e denied Norris' charges of monopoly, insisting that there were twelve hundred pulp and paper mills outside the combine. Nothing of moment occurred until the International raised prices following a four-day shutdown in November, 1903, allegedly carried out to shorten the supply and so pave the way for the increase, but actually motivated, in part at least, by fear of strikes among the workers. 29 These factors, aggravated early in 1904 by heavy snows, transportation troubles, and an extra demand for paper created by the outbreak of the Russo Japanese W a r , gave impetus to another campaign during which the publishers favored the manufacturers with their attentions. Their convention in February was again the scene of vigorous discussion initiated by D o n C. Seitz of the World, who urged the Association to "assail Congress in the interest of free pulp and free paper . . ." and announced that he had been authorized to subscribe ten thousand dollars to a fund for this purpose. Herman Ridder of the Staats-Zeitung, who was presently to play a major role in developments, seconded this with a promise of a thousand dollars. Conde Hamlin of The St. Paul Pioneer Press suggested another approach when he proposed a suit against the General Paper Co. under the antitrust act. These diverse but not necessarily antagonistic pro-

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posals provide a keynote for the year's developments: the publishers were anxious for action but not quite sure of the best method; as a result they sparred for an opening, finally adopting the anti-trust idea as most promising after tentative feelers toward both legislative and executive branches had met with discouragement. Opportunity to follow this lead was furnished by the introduction of a resolution into the House on March 7 by George L . Lilley of Connecticut asking that the newly created Department of Commerce and Labor "investigate the causes of the present high prices of the white paper used for the printing of newspapers in the United States and the great scarcity of the same, and whether the said conditions have resulted, in whole or in part, from any contract, combination in the form of trust or otherwise, or conspiracy in restraint of commerce among the several States . . ." 30 The publishers seized avidly upon this fortuitous opportunity to focus public attention.31 Seitz and Norris occupied the first day's hearings. The former, after advocating tariff reduction to the publishers in February, easily adapted himself to the approach through anti-trust laws which at the moment seemed more promising. In addition to repeating the old charges against the International he attacked the sales-agency scheme of the General Paper Co. and added charges of collusion between the two trusts to divide the territory at the Indiana line, with the eastern combine agreeing not to invade the western area except to serve old customers. H e alleged further that the International had arranged with the eastern independents, except the Great Northern, to buy all surplus production, thus keeping it off the competitive market. Norris, now business manager of the New York Times, repeated Seitz' accusations against the two combines and added a proposal for removing the tariff from wood pulp, which he asserted would make possible the establishment of converting mills, operating on a comparative shoestring, which could

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furnish sufficient white paper to break the combines' hold. In response to committee queries as to why the publishers did not openly press Congress and the administration to reduce duties, they admitted that not all the press agreed on such a course and hinted darkly that the International had inserted clauses in its contracts prohibiting its customers from making statements inimical to the trust. They preferred, therefore, to move by indirection, securing Congressional support for a "voyage of discovery" via the Department of Commerce and Labor as a preliminary to application to the Attorney General for prosecution under the Sherman Act. A week later the Committee reconvened to hear the manufacturers' rebuttal. Chester W . Lyman presented the case, consisting of personal comment plus a sworn statement by President Chisholm and Tom T. Waller, a Vice President, in the form of a parallel-column refutation of the publishers' claims which, it was carefully noted, were not made on oath. The combined statements brought out that the publishers' drive was not unanimous, but was spearheaded by two papers only, customers of the Great Northern rather than the International. It was then asserted that the animus of Seitz and Norris derived from two factors: first, that during the recent drought they had tried unsuccessfully to buy from the International when their own contractor could not supply their needs; and second, because the International had refused to sell them paper under contract at a lower figure than its regular customers received. With an air of considerable confidence the statement continued: "There is not now and never has been any combination, agreement, or arrangement of any kind or description between the International Paper Company and the General Paper Company; nor has there been any such combination, agreement, or arrangement between the International Paper Company and any other paper manufacturer, excepting only

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three companies, part of whose product is sold on a commission basis." As to the charge of apportionment of territory, "Such statement is absolutely false." Further: " T h e International Paper Company to-day and at all times has been willing to offer its product at the market price to all and any purchasers of paper, irrespective of territory or former source of supply, providing always that freight rates made the delivery permissible and the purchaser was willing to pay the value that the International Paper Company placed upon its product to its own customers at such time as the International Paper Company had surplus product . . ." Relative to the charge of buying surplus from the independents: "Such is not the fact. W e have at various times purchased from three other manufacturers of paper before referred to a limited amount, approximately 10 per cent of our own production, these purchases having been made to meet the unforeseen growth and extraordinary demands of parties with whom we had contracts . . . " As to the charge of prohibiting purchasers to print hostile comment: " T h e International Paper Company has not now, and never did have, any such agreement, or any similar agreement, or any agreement to that effect with any paper whatsoever . . ." In a confident conclusion it was asserted that " I f the International Paper Company has done or is doing anything in violation of established law, it is amenable to the action of the courts, and the Department of Justice has been established for the purpose and charged with the duty of prosecuting any such violations . . ." This forthright statement may have given the publishers pause 5 at any rate the next move was directed not against the International but the General Paper Co. The paper committee, consisting of Seitz, Norris, and Hamlin, conferred with the Department of Justice on April 26. They submitted evidence in their possession which seemed similar to the facts which in the Addystone Pipe Case had resulted in the dissolu-

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tion of a trust. The investigation then promised was conducted in collaboration with the publishers. These circularized the A.N.P.A., the Associated Press, and the Publishers' Press with requests for evidence of combination. The Department of Justice sent a representative to the Associated Press convention in September to gather information, supposedly either James M . Beck (who had prepared the Government's case against the Northern Securities Co.) or Frank B. Kellogg, both of whom had already been engaged to prepare evidence. As a result of these activities suit was entered in St. Paul, Minnesota, on December 27, to have the alleged combination declared unlawful and to enjoin its members from further actions in pursuance of such a combination. Thus was launched a long and complicated prosecution which in 1906 resulted in a decree ordering the dissolution of the company, the first outstanding publishers' victory.32 There followed an unhappy period for the manufacturers. With the General Paper Co. under fire in the West, competition in the East broke the International's control of price in the summer of 1904, and overproduction and unrestricted competition forced prices down through 1905 and into 1906 while production costs were mounting. These developments drove the mill men to desperation and set the stage for the happenings of 1907 which oriented the publishers' attack toward the tariff. Late in 1906 demand caught up with supply, and by October a boom was on which lasted until the Panic of October, 1907.33 This boom, gathering momentum through the winter, brought increased purchases which led to a shortage by April, 1907. Shortages begat price considerations and by summer manufacturers had begun to think of ways to offset the recent lean years. This in turn put publishers on the qui vive and in the autumn a situation developed which made the tariff a focal point for some years to come. By the time the boom collapsed with the Panic in October, con-

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tracts had been made at increased prices and forces had been set in motion which carried through the ultimate removal of all tariff restrictions on pulp and newsprint.34 T h e rising cost of raw materials, particularly wood, brought forebodings of price increases as early as February. By July John Norris was predicting that the big users would have trouble renewing their contracts at the old figures. A buyer for Wisconsin mills, short of wood, traveled fifteen hundred miles to Quebec to buy fifty thousand cords in the summer. A speculator in New Y o r k allegedly tied up twenty thousand tons of paper. A n d as a background to all these happenings, Canadian sentiment began to focus upon a determined drive to prohibit the exportation of pulpwood as a means of annexing a larger share of the pulp-and-paper business of the continent. Never far from the surface since 1900, this policy emerged in February, and by June a full-dress campaign was underway. Sentiment was divided between advocacy of Dominion and Provincial action, and between export duties and absolute prohibition of exportation, but the main point was increasingly clear—Canadians were becoming conscious of the power of possession, and were debating only the best means of wielding their weapon. T h e y were aided in their propaganda by a gloomy government report that Americans were consuming between three and four times the annual growth of domestic pulpwood. 35 Under all these circumstances the management of the International Paper Co. decided upon two drastic changes in policy. Like others in the field, it had been accustomed to making long-term contracts to large purchasers with prices set either for the duration of the contract or reviewable periodically during its life. In practice the consumers held the mills to their contracts during periods of rising prices, but refused themselves to be bound if prices dropped. In the early summer the executive committee decided to limit new contracts to a single

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year and to raise the price to $2.50 in a desperate effort to retrieve the financial situation.36 In early September a number of mill representatives met in New York and according to the trade press decided upon another increase of fifteen cents, making the carload price $2.65 on quantities under two thousand tons. Thus the so-called "independents" followed the earlier example of the International, and the die was cast.37 This challenge had to be met. Ridder's story of subsequent events tells how he was threatened with a price increase by his supplier, made his contract under this duress, and proceeded to call a special meeting of the A.N.P.A., of which he was then President, for September 18 to discuss the situation.88 This gathering, held in conjunction with the annual convention of the Associated Press, may be taken as the opening gun of the publishers' all-out campaign. It is worthy of note, however, that a vocal minority still felt that the manufacturers were justified in price increases, which the publishers ought to put up with, and doubted the efficacy of tariff removal as a panacea. Norris' resolutions, which were adopted, offered alternative procedures through the tariff and the Sherman Act, though he seems to have been apprehensive that the latter might not be successful, legal advice having indicated that although the manufacturers were sailing close to the wind, their organization might not be in violation.89 Publishers' policy during the remainder of the autumn followed the double line just indicated, with a tendency to push the tariff aspect upon the attention of President Theodore Roosevelt. In mid-November Attorney General Charles J. Bonaparte indicated his willingness to proceed against the paper combine upon receipt of proper evidence.40 A committee headed by Medill McCormick of The Chicago Tribune waited upon Roosevelt on November 7 and presented the publishers' account of their sufferings at the hands of the manufacturers.

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Some contemporaries were so unkind as to suggest that the President's agile mind saw an opportunity to enlist press support in diverting attention from the Panic, responsibility for which was being laid on his shoulders, by calling attention to the exactions of a trust. At any rate, he was quoted as promising "that he will recommend to Congress the abolition of the duty on press paper, wood pulp and the wood that goes into the manufacture of paper j also, that he will make a recommendation to the Department of Justice that it take immediate steps to ascertain whether the anti-trust laws are being disobeyed by the manufacturers of paper . . ." 41 Although the sequence of events is not entirely clear at this point, Rooseveltian ardor, if actually aroused, was quickly replaced by political caution. The possibility that such a recommendation might open the whole tariff question was not lost upon the President, who wanted no such result. He soon began to temper his proposal and to justify it as a conservation measure rather than as tariff revision. By the time his message went to Congress on December 3 his recommendation was confined to wood pulp and qualified by suggesting that as a quid fro quo Canada agree not to levy upon the exportation of wood. It was removed by five printed pages from his more famous pronouncement in favor of general tariff revision, to take place after his successor had assumed office. The fact, however, that he could be induced to make even such a lefthanded gesture as this is a commentary at once upon the power of the press and upon the flexibility of his supposedly adamantine stand on the question of tariff revision. The message itself reads: "There should be no tariff on any forest product grown in this country 5 and, in especial, there should be no tariff on wood pulp 3 due notice of the change being of course given to those engaged in the business so as to enable them to adjust themselves to the new conditions. The repeal of the duty on wood pulp should if possible be accompanied by an

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agreement with Canada that there shall be no export duty on 42 Canadian pulp wood . . T h e decade 1897-1907 produced significant aspects of the story under survey. Publishers' interests were challenged successively by tariff discriminations in favor of the manufacturers, by successive swings to high prices, and by a double movement toward combination among the mills. Responding somewhat reluctantly to these challenges under the leadership of John Norris and others representing the metropolitan press, their Association proceeded to defend its interests. Choice between the two avenues of approach, the tariff and the anti-trust laws, was rendered difficult by circumstances and the long-time convictions of many publishers, but eventually the latter was pressed as more promising, while the former was not forgotten. As a sort of specter in the background emerged the increasing likelihood of shortages of raw material which counselled adoption of conservation measures. This possibility in turn whetted Canadian appetites for a chance to devote their tremendous resources to supplying the American market, with the conviction growing that the initial step in manufacture should be transferred to northern pulp mills. For the moment the tariff emerges as the villain of the piece.

CHAPTER

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set before the Panic, remained high despite the slack consumption and retrenchment which followed. T h e publishers' drive therefore must needs be continued in 1908. T h e technique paralleled that of 1907: a double push directed toward both combination and the tariif. This push gathered hitherto unprecedented momentum, elicited a further presidential blessing, became involved in partisan congressional maneuvers, and was sidetracked only at the last moment by taking traditional refuge in investigation by a special committee—wise tactics in an election year when any tariff discussion might be the fuse which would lead to the dynamiting of Republican hopes. T h e investigation, one of the most thorough of its kind in our history, postponed the evil day for the manufacturers, who had faced it with equanimity} it found the publishers still not unanimous in following the lead of the metropolitan papers which increasingly assumed the direction of the fight; and it uncovered a mine of fact and opinion worked by all subsequent students of the newsprint problem. 1 APER

PRICES,

T h e earliest move was Ridder's letter to Attorney General Bonaparte under date of February 10, 1908, replying to Bonaparte's request of November 13, 1907. This contained information on efforts to stifle competition in various lines of paper manufacture, particularly the fiber and manila pool, members 39

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2

of which were subsequently indicted and fined. On the 19th he directed a letter to members of the Association charging that paper mills were being closed and production was being curtailed in order to maintain the price level. On March 16 he circularized "every publication in the United States" in a bulletin which brought the tariff aspect to the foreground, where it was to remain until 1 9 1 3 . This bulletin reprinted documents already mentioned and warned publishers that the "situation is acute. Time is the essence of success just now. A letter written within the next forty-eight hours should be extremely helpful in accumulating a sentiment in Congress for the protection of printers and publishers." This resulted in a flood of letters during the rest of March and early April and was doubtless influential in evoking Roosevelt's second request for action.3 The President sent a special message on March 25 urging passage of a select list of measures before Congress adjourned. While urging adequate preparation prior to general revision, he asserted that "one change in the tariff could with advantage be made forthwith . . . " Repeating his earlier suggestion that wood pulp be free-listed as a conservation measure, he went further and advocated " a corresponding reduction upon paper made from wood pulp . . . " when coming from areas which did not impose export restrictions. T h e same day John Sharp Williams, minority leader, announced that he would obstruct the legislative process until several proposals, one of which dealt with the paper question, were assured of passage. This precipitated a filibuster which was an intermittent element in succeeding developments. Meantime, on March 3, Congressman Frederick C. Stevens of Minnesota introduced a bill to remove the paper and pulp duties with retaliatory levies in case export duties were imposed. This became the main objective of the publishers until Congress adjourned.4

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Events crowded upon each other and moved to a climax in April. With publishers demanding congressional action and with gleeful Democrats making sport of their Republican brethren for not permitting it, Speaker Joseph G . Cannon introduced on April 2 two resolutions directed to the aspects of the problem relating to the anti-trust laws. These resolutions called upon the Attorney General and the Secretary of Commerce and Labor for information about any prospective prosecutions of the International Paper Co. T h e resolutions were adopted on April 8 after a partisan debate. T h e reply from the Department of Commerce and Labor was negative. Bonaparte informed Congress on April 13 that he had several weeks earlier turned over all the evidence in his possession to the United States Attorney in the appropriate district, with instructions to conduct further investigations and, if these disclosed sufficient evidence, to proceed with indictments under the Sherman Act. H e continued: " U p to the present time no evidence has been obtained by the officers of this Department sufficient to justify the institution of legal proceedings, either civil or criminal, against any alleged combinations of wood-pulp or print-paper manufacturers. T h e information obtained, however, justifies further investigation of the facts, and such investigation is in progress." H e indicated his belief that a thorough inquiry might give proof of dereliction. 5 On April 1 7 , the day before Herbert Knox Smith, of the Bureau of Corporations, submitted his report to Congress, President A . N . Burbank of the International Paper Co. visited the Department of Commerce and confidently invited " a searching investigation" of the company's books as a means of demonstrating the "absolute inaccuracy" of Ridder's statements about its operations.6 Pressure on the tariff aspects had meantime been developing. A f t e r an interview on April 7 Ridder reported: " I am satisfied with the attitude of Speaker Cannon on this ques-

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tion." H e later told the Publishers' Association that Cannon had "practically agreed . . . " to let tariff removal go through. When faced with a specific demand to recognize a motion to suspend the rules and permit passage of a particular measure, however, he bethought himself of the possible political consequences and refused, as he put it later, to be "bulldozed." H e took refuge in the introduction of a resolution (April 20; passed with commendable celerity on April 2 1 ) proposing a select committee of six to investigate a long series of allegations contained in fourteen "whereases" designed to place the publishers' contentions in an unfavorable light. Republican supporters of the proposed research urged the necessity of knowledge prior to action, there being no consensus about whether the high price of paper was due to the tariff, to combination, or to legitimate increases in production costs. One question raised, pertinent here as through all the discussion, was how a tariff, essentially stable since 1890 and through three successive enactments, could suddenly raise paper prices. Democratic opponents combined ridicule of Republican tariff timidity in a presidential year with accusations of trying to circumvent the "old German devil," head of the publishers, in his desire to put through any one of several proposals slumbering in pigeonholes of the Ways and Means Committee. Thrown in for good measure were bitter attacks on Cannonism, part of the filibustering maneuvers which had characterized most of the month. Thus the " M a n n Committee," composed of four Republicans and two Democrats, was launched upon a strenuous career of investigation which lasted until February, 1909, occupied weeks of its members' time, took them upon thousands of miles of travel, and piled up hundreds of thousands of words of testimony upon all phases of the problem.7 T h e story of the events of 1908 should be concluded prior to an attempt to evaluate the committee's work, though this

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involves consideration of some of its activities. T h e Publishers' Association, in session April 22-24, viewed the Cannon Resolution as a subterfuge which must be combatted by force. Their tactics were compounded of compliance with the demands of the Mann Committee for testimony, which must be furnished, and continued pressure to secure passage of the Stevens Bill, their main objective as long as any hope remained. A formulation presented by Norris on April 22 condemned the Mann Committee and demanded a vote on this measure; it was accompanied by telegrams to all members of Congress seconding this idea. T h e Committee opened its sessions almost immediately, possibly with the idea of calming the publishers' indignation, and a press delegation consisting largely of Illinoisans (a gentle gesture in Cannon's direction) was appointed to wait upon both Congress and the committee on the 25th. T h e Association preceded its committee by a telegram to Mann urging action on the Stevens Bill. Norris, spokesman for the publishers, arrogantly rehearsed the papermakers' misdeeds and demanded of the committee a statement of its scope and method of procedure. H e stated that the Stevens Bill comprehended the entire range of the publishers' desires, since its passage would break the hold of the combination by restoring competition. H i s testimony occupied most of the committee's attention for two weeks, when the manufacturers took over. 8 If Norris was arrogant, the manufacturers were confident. On their behalf David S. Cowles thanked all members of Congress for "declining to unjustly discriminate against our industry, in spite of the coercive attitude of the press . . ." H e foreshadowed the industry's defense by declaring that an increase in the costs of pulpwood and labor far outweighed higher paper prices, which incidentally, he asserted, were much less than the publishers had implied. Monopoly was denied. This confidence was matched by the publishers' re-

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luctance to appear in their own behalf; as the hearings moved along it was necessary for both Mann and Ridder to urge them to appear before the committee. On May 3 Ridder privately urged publishers to persuade their Congressmen to support the Stevens Bill, and on the 1 ith a deputation visited the Speaker on the same errand. The Mann Committee's preliminary report, rendered May 28, was a disappointment to the publishers, for the majority, while not yet ready to commit itself on a permanent tariff policy, attacked the Stevens measure as an insufficient safeguard against Canadian export restrictions. A minority report signed by the Democratic members vigorously supported it. Following the report Mann introduced, by request, a bill said to have had the approval of the State and Treasury Departments and to have been based on a provision in the Dingley Tariff permitting the President to negotiate reciprocal agreements under proper safeguards. This was designed to open the way for removal of the duties if Canada could be persuaded to abandon her restrictions.9 Congress adjourned two days later; this marked the end of activities for the session. The poor prospects of the Stevens Bill and the evident intention of the Mann Committee to continue its investigation beyond the adjournment of Congress, together with the nonetoo-enthusiastic support which the publishers gave their cause, warned the advocates of tariff removal that they were in for a long fight. Before Congress disbanded, Ridder had approached a selected list of publishers with a proposal to hire the willing John Norris for a two-year period to press their cause. It was invidiously suggested that this was done as an individual and not as President of the A.N.P.A., with the implication (which will be supported by evidence below) that the Association's drive was not unanimously supported. Be that as it may, Norris resigned as business manager of the Times on June 11 to accept, at a salary of fifteen thousand

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dollars a year for a two-year period, a task which he had been vigorously prosecuting for years without pay. The A.N.P.A. directors ratified his appointment in a resolution preceded by a formidable series of "whereases" which recited that publishers were "surprised and startled . . . " by recent revelations to the point where it was incumbent upon them to continue the work already begun upon a sounder financial basis than before. Thus began a formal connection which was to continue through the publishers' final triumph in the Underwood Tariff of 1913. 1 0 The summer witnessed a few developments. Ridder kept his memory green by a letter to Roosevelt demanding more active steps against combination in various branches of the industry. H e also succeeded in getting William Jennings Bryan and the party which nominated him for the Presidency to endorse free pulp and paper in a platform plank which asserted that "Existing duties have given to the manufacturers of paper a shelter behind which they have organized combinations to raise the price of pulp and of paper, thus imposing a tax upon the spread of knowledge. W e demand the immediate repeal of the tariff on pulp, print paper, lumber timber, and logs, and that these articles be placed upon the free list." 11 T h e American Paper and Pulp Association indicated awareness of the coming battle and tightened its belt. President Cowles warned the executive committee of the serious threat to the already too slight tariff protection and counseled "drastic steps" to have the duty retained. As a result the presidency became a full-time position with the function of gathering statistics for the use of the trade. A committee of twenty-five was chosen to assist in providing material for presentation to the proper authorities. Arthur C. Hastings, who soon succeeded to the presidency, announced in his initial communication that "the matter of prices will not be touched upon by this bureau, but we hope in the course of a few months

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to be able to furnish any member of the association full information regarding the output of his particular grade of paper, the demand for same and the stocks on hand at some particular period . . ." H e later admitted that his function was "to educate the manufacturers of paper to the frame of mind whereby they get for their product all the market will warrant." T h e A . P . P . A . thus followed a trend common during the period, away from outright combination toward formation of trade associations as a means of lessening competition.12 T h e next area of conflict was the passage of the PayneAldrich Tariff, to which attention will be given after a brief survey of the Mann Committee's activities. As has been noted, the publishers' delegation arrived for the Mann Committee hearings bearing a chip on its collective shoulder and warning of its "mistrust [of] any inquiry which does not carry with it an assurance of substantially immediate action by both Houses . . . " 1 3 Norris' opening address charged that all proceedings were intended to delay relief long overdue, promised to furnish proof of manufacturers' misdeeds sufficient to justify piecemeal tariff revision in the publishers' favor, and truculently demanded the range of the committee's inquiry. Mann mildly replied that what the committee wanted was information, and proceeded to extract six volumes of it from both parties and all available sources. T h e committee busied itself in Washington until M a y 23 and during the autumn months spent considerable time in the Middle West and in Canada adding to its store. Entering upon his task, as far as could be ascertained, without preconceptions, M r . Mann presided over a meticulously careful investigation, marshaling the protagonists along with considerable urbanity until an occasionally recalcitrant or evasive witness called forth the acerbity of which he was a master. Norris occupied the floor the major part of the time for thirteen days, other publishers testifying two full days and

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parts of three others, with Norris filling in when no publishers were available. T h e manufacturers filed briefs on M a y 14, followed by testimony by Cowles, Lyman, Hastings, and other leaders of the industry covering six days, with one day allocated to representatives of labor in the mills. During the Washington hearings Mann took the committee to Hudson Falls, N e w York, to see the mill of the International Paper Co. and familiarize its members with actual operations. T h e committee visited several mills and forests in Wisconsin and Minnesota during September and October, held a hearing in Chicago in November, and traveled to Canada in the same month. T w o days' testimony at Washington in December completed the formal sessions, and a final report was rendered in February, 1909. From the first Norris manifested greater facility in assertion, invective, and implication than in hard facts, often permitting his hearers to believe that statements and statistics covering the whole paper industry were confined to newsprint. Mann frequently became impatient with these tactics and from time to time took Norris sharply to task, but was never able to halt them completely. Norris' animus toward the manufacturers was indicated early in the story by a statement which became notorious in the days to come. Though somewhat divorced from its context as later quoted, his statement relative to the International Paper Co.: " I have a theory that I can break these people . . . " is not overdrawn. 14 H i s main argument was first directed to the removal of the duty on pulp, on the supposition that with this product entering freely, along with free wood, paper manufacture could be divorced from its existing confinement to the areas where water power was abundant and manufacturing was susceptible to concentrated control. T h e Stevens Bill would of course attain this objective and so break the trust and restore competition. H e further asserted that the so-called "independents" in the East

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were organized into a community of interest to raise prices through a selling agency, while the western mills, despite the dissolution decree of 1908, were still operating in collusion through a "traffic manager." H e accused the International of artificial curtailment of output to raise prices and reiterated his standard charges of overcapitalization, overcutting, abuse of tariff benefits, taxation of intelligence, and arbitrary apportionment of customers among the mills. On April 30 Mann pinned him down to admission that the charges of the publishers concerning the exactions of the mills had been exaggerated and had been accompanied by inaccurate statistics from which incorrect inferences could easily be drawn. Presently Norris let it be known that his group would rest its whole case on the fact of combination, with consequent unjustifiable price increases j he desired at this point, he said, to avoid the tariff question until the fact of combination had been demonstrated, and spent a considerable amount of time in trying to establish his thesis. It soon became increasingly apparent that the publishers were not responding with great alacrity to their opportunity to bedevil the manufacturers. Mann had written to all members of Congress asking them to secure the presence of their constituents who might have interest on either side. O n M a y 1 McCormick asked Mann to order the publishers to appear, since Ridder's strongest request had not availed to bring them in. On the same date Ridder was pleading by telegraph with twelve hundred members of the Associated and United Press groups: " W i l l you go to Washington next week, if necessary, to testify? Don't hesitate to appear in your own interest . . . " McCormick furnished Mann with a list of forty publishers to whom the chairman sent a special exhortation: " T h e committee begs to ask whether you will appear before the committee within the next few days and furnish the committee information as to the present and previous prices paid

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by you for paper, and under what terms of contract . . . " O n M a y 4 McCormick himself sent out telegrams, and on M a y 6 the committee sent out nearly seven thousand letters to all papers listed as having a circulation of upwards of fifteen hundred, enclosing a questionnaire asking for sworn statements of the prices paid for newsprint over a period extending back to 1890. 15 A leading query was for a judgment whether publishers would be benefited by an immediate removal of the tariff on pulp and paper. W h e n this, together with a follow-up request, elicited only 1,822 replies by mid-June, the committee abandoned further efforts to pursue the matter. 16 About the same time the publishers, perhaps under the impetus of embarrassing questions by the committee, took up the cudgels and on M a y 1 2 - 1 3 telegraphed thirteen hundred newspapers and sent letters to eighteen thousand publications urging prompt and f u l l replies to the committee's questionnaire. Norris asserted that this was done to assure all publishers that the inquiry was not, as had been the general opinion, an unfriendly one. It was not until M a y 6 that publishers testified in appreciable numbers, and even here Norris was compelled to step into the breach from time to time. 17 T h e i r story was a repetitious one of higher prices and increased trouble in securing paper. Repeated inquiry by Thetus W . Sims, a minority member of the committee, to learn whether one set of duties could be removed without disturbing the whole tariff structure led Norris to specify again that the sum of the A . N . P . A . tariff program was removal of duty from groundwood and cheap newsprint, and did not include chemical pulps or fine papers. Sims was also insistent upon drawing out the publishers to determine whether removal of duties would break the combination and reduce prices; here opinion was not unanimous, not all publishers being willing to follow Norris in this particular. O n M a y 1 3 - 1 4 M a n n interrogated Norris sharply on the accuracy of A . N . P . A .

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charges and forced him again and again to admit that assertion was a larger ingredient of his testimony than real evidence; Norris finally admitted that he expected thè committee to gather the evidence on his charges by questioning the International people. On the whole the publishers failed to come off too well before the committee and hardly proved their claims of combination. Their chief spokesman was rudely handled. They did not agree among themselves on the probable effectiveness of removing the duties in lowering prices. The hearings contain many excerpts from contemporary editorial comment, gathered in part by Mann and in part by the manufacturers, which show this divergence. Some opposed tariff reduction on principle. Others maintained that a minority composed of metropolitan papers had secured control of the A.N.P.A. and were using it to their own ends. There was a considerable amount of self-righteous comment by publishers of higher-priced papers that the "penny press," unable to make ends meet, was using this device to get its chestnuts pulled out of the fire.18 T h e manufacturers' case was opened by Cowles of the A.P.P.A., who paid his respects to Norris, denied the charge of combination on behalf of his organization, and denied knowledge of such practices in the industry. H e asserted that removal of the tariff would have a tendency to depress the price of paper and would furthermore open the door to foreign competition, both Canadian and Scandinavian, to the detriment of the already impoverished paper industry. H e gave it as his considered opinion that most of the large papers were covered by contracts at figures so low as to leave them untouched by any increases which had been imposed. H e declared that the whole move was as much a bear raid as any staged on Wall Street and referred to a conversation between himself and Ridder "within forty-eight hours" in which the latter had admitted willingness to do anything within his

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power to reduce paper prices. Others followed him in denying combination and insisted that there was nothing sinister in a simultaneous price increase by virtually all companies. L y m a n entered a general bill of exceptions to Norris' charges in an official statement signed by President Burbank: " T h e International Paper Company has not now and has not had any agreement or understanding for fixing or maintaining prices or curtailing output of any kind or description with any other paper manufacturer or sales agency whatever. " I t is not a party to any combination. It is not a party to any gentlemen's agreement, or any other agreement affecting prices or output. It has stood and proposes to continue to stand absolutely alone in the sale of paper and in the conduct of its business in every respect . . . " Removal of the duties, the statement continued, would probably have little immediate effect, "but if what the publishers claim is true it would probably eventually transfer the industry to Canada . . ." This would eventuate through stimulating erection of Canadian mills which could undersell those in the States. Several spokesmen went into details on various phases of the problem, admitting that the International set the price for the industry, repeating denials of any intent to raise the price to $3.00, and asserting that in their opinion the publishers' hullabaloo had been raised by Norris, Seitz, and Ridder, with one eye on their personal pocketbooks. T h e y were inclined to be evasive when queried by Mann about collusion in raising prices in the autumn of 1907, admitting that meetings were held, but denying that prices were set. Sims made the pertinent point that it was most peculiar that they were so careful not to discuss the very thing they would be most likely to discuss. One or two were frank enough to admit that the reason they raised prices was because they needed the money and thought they could get it. A number agreed that tariff removal would be likely to move the industry north of

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the border unless Canada could be bound to allow free exportation of pulpwood. Mann's questioning of the manufacturers in several instances indicated his interest in a reciprocal agreement with Canada involving removal of the duty on pulp in return for the foregoing concession on Canada's part, which coincides with his bill, mentioned above. T h e preliminary report of the majority reflects the trend of the evidence, and without stating it in so many words, justified, with some reservations, the Pafer Trade Journal's exultant headline: " P A P E R M E N WIN." Summarizing the publishers' contentions that prices were up because of a combination of trust and tariff factors, it admitted the increase on new contracts but declared that circumstances justified some increase, without specifying how much. While noting that such manufacturers as had appeared had denied under oath the existence of combination to raise prices, and while admitting that the committee had not found such evidence, the conclusion was that "considerable evidence was presented which might excite suspicion that such a combination had been made and was in existence." Thus the verdict on the publishers' charges was for the moment a Scotch one, but the manufacturers could not rest very easily. Although the committee was not ready to commit itself on a permanent tariff policy, its unwillingness to assent to the removal of existing import taxes without assurances from Canada that it would not impose export duties on paper, pulp, or wood gave more comfort to manufacturers than to publishers. Continuing, the report stated: " I t would seem that for the American publisher to be assured of low prices for his paper, it is essential to maintain paper mills in the United States. Any policy that would give the Canadian mills a preferential advantage over American mills in obtaining the raw material at a lower price must inevitably result in the dismantling of American paper machines and the ultimate dependence of American publishers

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on Canadian mills . . ." T h e retaliatory duties of the Stevens Bill (on pulp, equal to the export duty imposed j on paper, one-tenth of a cent per pound for each dollar of export duty levied on a cord of pulpwood) were insufficient to justify the risk taken in passing that measure removing all import duties on pulp and newsprint. Still left in abeyance were the charges of combination and the question of a proper tariff rate. T h e last of these was to be fought again in the Payne-Aldrich Tariff debate, to which the Mann Committee's final report was to furnish an important footnote. 19 T h e W a y s and Means Committee held a hearing on November 21, 1908, preparatory to the framing of the bill which eventually became the Payne-Aldrich Tariif of 1909. Norris appeared with a fifteen-thousand-word brief which became the subject of acrimonious discussion. T h e paper-makers' team of Hastings, Cowles, and Lyman took up the rebuttal in a session which lasted from mid-morning until nearly midnight. Most of the standard arguments were rehearsed, some adapted by new emphases to changing circumstances.20 In response to an early inquiry about his program Norris sounded a new note, perhaps suggested by recent developments connected with the Mann Committee: "Free pulp, free paper, and reciprocity with Canada for free pulp wood, free paper, ami free •pulp" (author's italics). This, probably the most important new feature of the hearings, proposed to remove American duties on pulp and newsprint from Canada in return for Canadian assurances of no restrictions on exports of wood, pulp, or paper. In addition to repeating at length his usual arguments about tariffs and manufacturers' combinations, Norris emphasized particularly the aspects of labor and conservation in the problem. American mills, it was charged, paid their labor less than Canadian, thus robbing the workers of their share of the benefits of protection. H e capitalized on the current interest in conservation by emphasizing the in-

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roads the manufacturers were making upon American forests, which were totally unable to provide for the industry's needs. At the same time he charged them with buying rights to huge Canadian tracts as speculations against an American shortage, using money for this which should have gone into improving their American properties. H e gave fantastic figures on Canadian spruce resources, asserting that with American cutting stopped altogether, Canada possessed sufficient timber to supply the American market for two hundred years without any attempt at replacement. 21 Opening for the manufacturers, Hastings paid his respects to Norris' recital: "I never did like that paper, and this is the third or fourth time I have heard the most of it." So frequently had Norris charged combination among manufacturers that their unanimous denial was almost an automatic response. Their main attention was devoted to urging retention of existing tariff rates. Removal, they asserted, would open the domestic market to European as well as Canadian competition, which would be disastrous because of European investors' willingness to take a lower income on their investments. The tariff, low in comparison with that on other commodities, was mainly useful as an insurance policy. As Hastings put it: " W e believe that when business is normal and the demand equal to the supply the tariff has little or no direct influence on prices. During times of depression it is a protection to the home manufacturer, but with the present tariff, under any conditions, the rate is not so high but what foreign paper or pulp can be imported into this country to supply the demand without particular hardship to the consumer." Remove the tariff, however, and the inevitable, though possibly not immediate, result would be the closing of American mills and the gradual transfer of the industry to Canada within ten years. This aspect of the situation received much greater attention than in any previous period. Furthermore, reduction of

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the duties would be the reverse of a conservation measure, as Norris had argued, for it would force the domestic producers to cut their timber indiscriminately as a means of meeting the new Canadian competition which would result; as much as five million acres would be devastated, according to one statement. T h e Mann Committee rendered its unanimous final report on February 19, 1909, prior to the introduction of the Payne Bill. 22 It gave cold comfort to the mill men. It admitted frankly the inadequacy of domestic spruce to supply prospective needs and by the same token confessed dependence upon the Canadian product. It proposed retention of the existing duty of one-twelfth of a cent per pound ($1.67 per ton) on mechanical pulp, with the proviso that this be remitted in the case of pulp coming from any area which imposed no export restrictions.23 T o induce the removal of existing Canadian restrictions, a quid fro quo must be offered. This was to take the form of reducing from $6.00 to $2.00 per ton the duty on newsprint valued at not over two and one-fourth cents per pound, again on condition that no interference should be given to the exportation of wood, pulp, or paper; any such levy would restore the full $6.00 rate. T h e retention of the $2.00 rate was justified on both revenue and protective grounds, and was asserted to be about equal to the difference in cost of production in the two areas. It was, in the words of one of the committee, an effort "to perpetuate the American newsprint paper industry in this country. W e want to continue the newsprint manufacture and have newsprint paper sold at as low a price as is consistent with a fair profit. T h e only way that can be secured is by opening our ports under proper reciprocal arrangements by granting Canada some concessions for the admission of its pulp and paper in return for their free pulp wood, and at the same time adequately protecting the American paper manufacturer." This was obviously

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intended as an olive branch extended to Canada to insure continued supplies of raw materials by the reciprocity of giving the Canadian finished product free access to our market. T h e report, however, was vulnerable in at least one respect: W h a t was intended as an olive branch south of the border could be interpreted north of it as a club waved under Canadian noses to force abandonment of perfectly legitimate provincial restrictions of long standing under which contractual obligations had been incurred. T h e subsequent story will show that this antithesis between the olive branch and the club was to be one of the crucial problems of the coming months. Moreover, it took no great discernment to discover in the committee's recognition of Americans' dependence upon Canadian wood a potent weapon which might if necessary be brandished in retaliation. 24 T h e report left the leading journal of the paper industry completely speechless for over two weeks, after which it commented caustically on the "incomprehensible" recommendations of the committee. T h e change of front involved in the proposal to cut duties was interpreted in the light of a desire to conserve domestic forest resources. After taking some time to formulate a defense, Hastings spoke for the manufacturers. H e charged that the committee's tariff-reduction proposals had never been supported by more than a small minority of the publishers, one that was composed mainly of Democrats "whose principles and beliefs coincide with their desires in this matter . . . " T h e suggested scheme left the manufacturers "aghast at the danger of ruin which confronts them." H e pointed to the fact that the final report made no mention of the charges of monopoly and conspiracy in restraint of trade which had formed the original basis of the investigation. H e denied the prediction of ultimate failure of the domestic supply of raw material, alleging that vegetable fiber and other woods could be used in the event of exhaustion of the spruce

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forests. H e asserted that repeal of the duties would defeat the object of conservation by forcing domestic producers to strip their timber lands in order to recoup their investments against the competition of cheap Canadian paper. T h e reason why the Government "should surrender an industry to another country by legislation . . . is, in our opinion left altogether obscure . . . " T h e organized publishers left no record of their attitude toward the report} doubtless they occupied themselves with trying to decide whether this halfloaf was, or was not, an improvement upon no bread.25 It now becomes necessary to examine the tortuous legislative history of the pulp and paper sections of the Payne-Aldrich Tariff Act. This is essentially a narrative of the way in which the controversy over print paper became involved in the larger tariff problem, its subjection to conflicting pressures, and its emergence in a practical victory for the manufacturers, in hope deferred for the publishers, in the creation of an embarrassing international situation, and, in the long run, in a heavy contribution to the downfall of the Republicans in 1912. It furnishes an excellent commentary on the involved and sometimes devious processes by which tariff rates are arrived at in general revisions, and perhaps even points a moral in the direction of a more scientific approach, if such there be. Payne's introductory remarks threw light on the process by which these sections of the act were framed. H e announced that he had already satisfied himself, before the Mann Report came in, that mechanical pulp might be free-listed without injury to any domestic interest. T h e report, therefore, merely reinforced his own judgment. H e had not, he said, come to any decision regarding newsprint, and adopted the recommendation of the committee in this respect. Thus the bill embodied the exact terms of the Mann Report; adopted them, Payne asserted, under the impression that both publishers and

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manufacturers were satisfied with its solution of the question. I t will be recalled that the manufacturers had waited some time before deciding what line their dissatisfaction with the Report should take; it was during this period that the schedules were set, and Payne adhered to them despite the manufacturers' protests later received.26 It was soon apparent that it was useless to appeal to Payne for rate changes in either direction. Both sides turned to the Senate where, before the Finance Committee, on the floor, and before the Conference Committee, pulp and paper, along with lumber, hides, and gloves, became the storm center of complicated maneuvers which finally resulted in a considerable increase in the paper rates, to the corresponding discomfiture of the publishers. T h e House debate covered many of the routine arguments previously adduced and was notable mainly for pronouncements by Stafford (already noted) and Mann. T h e latter took the floor on March 31 to insist that he and his committee had refused to be bulldozed by either party to the controversy. H e had, he said, resisted newspaper pressure to make a stand for a tariff reduction in the preliminary report, published on the eve of a hot political campaign when the tariff was an issue. H e had on the other hand recommended tariff reductions in the final report, despite manufacturers' desires to the contrary. H e asserted that Government intervention was the only possible means of securing an adequate domestic supply of spruce; otherwise eventual dependence upon Canada was inevitable. H e once more extended the olive branch of reciprocity to Canada by means of his Report and the provisions of the Payne Bill: "we offer to exchange with Canada a freer market for her pulp and paper products for a freer and fuller opportunity of securing from her the raw material with which to maintain our own pulp and paper mills." 2 7

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T h e Senate Finance Committee engaged in its usual anticipatory explorations prior to House action on the Payne Bill on April 9. Norris reported to the annual convention of the Publishers' Association (April 22) that he had been summoned to Washington about five weeks earlier and told that the Senate "had been fixed up against us, and that there was trouble for us unless we could bring pressure from the newspapers of the country." H e finally visited Nelson W . Aldrich, chairman of the committee, in company with Ridder and Seitz, on April 6. Aldrich's attitude was not very friendly at first; he opened by asking how far his callers considered themselves representative of the nation's press, since he had been informed that their program was the work of interested agitators. A t another session Norris met in Aldrich's office in a twoand-a-half hour discussion with Senator Reed Smoot and representatives of the A . P . P . A . and the International Paper Company. Aldrich stated frankly that he was a protectionist and would be governed in the matter at hand by the comparative cost of manufacture in the United States and in Canada. Norris pointed out that cost figures were available in the Mann Committee Report; Aldrich refused to accept these, but accepted from L y m a n others purporting to show a Canadian cost of $8.00 per ton less than that in the United States. O n the basis of these figures the manufacturers opposed any change in the duties. Norris championed the Mann-Payne proposal, the publishers evidently having decided to take this half-loaf rather than strive for complete removal of the paper duties. Neither side would compromise its position, and the conference dispersed. Norris gave the devil his due, however, and commented on Aldrich's willingness to listen—an attitude to which Aldrich was probably not unaccustomed, since he was being subjected to pressure from fifty thousand manufacturers while trying to adjust the rates on four thousand items. T h e

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committee evidently reached an impasse similar to that of the conference, for the Aldrich substitute was reported without a clause concerning pulp and paper.28 There ensued a period of relative quiet while the Senate busied itself with other affairs. T h e Publishers' Association circularized the upper House urging adoption of the House proposals, and adopted resolutions commending Cannon ( ! ) for instigating the Mann Committee and the Committee for its valuable work. In June Norris sought a committee hearing in order to rebut some of the evidence on Canadian costs already in the record. Early in the same month Sir Lomer Gouin, Prime Minister of Quebec, threatened further restrictions on the exportation of pulpwood. 29 T h e lull was broken on the seventeenth when Aldrich reported the proposals governing pulp and paper. W o o d pulp was left untouched for the moment, but the Finance Committee recommended doubling the House proposal on newsprint, raising the rate to $4.00. T h e issue was sharply drawn by an amendment offered by Norris Brown of Nebraska, the effect of which would be to put newsprint on the free list. H e called attention to Gouin's recent threats and asserted that it was our duty to make the first move toward conciliating Canada rather than one which would antagonize her. Eugene H a l e of Maine, a paper State, objected on the other hand to even this modest concession, asserting that had the committee considered the difference in the cost of labor, as well as in the cost of wood, it would have recommended a rate of five or six dollars3 actually he claimed, American wood cost $6.00 per ton, and American labor $2.00 per ton more than Canadian. A hot discussion followed, with sharp differences on the question of labor costs, with H a l e charging that the Mann Committee investigation had been superficial in this regard. Aldrich seconded this charge, admitting his refusal to accept the Mann Committee figures on costs, and maintaining that

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neither the publishers nor the manufacturers had furnished him with adequate evidence on relative production costs with the single exception of figures on the Belgo-Canadian Company, on the accuracy of which both sides agreed. Hale's colleague William P . Frye, Jacob H . Gallinger of N e w Hampshire, and others participated in the debate, which lasted for most of two days before the Brown amendment was defeated.80 A f t e r some further discussion Robert M . LaFollette of Wisconsin proposed an amendment making the Aldrich proposals effective until July 1, 1912, when the rate would revert to $2.00 per ton j this, he said, would give the Western mills time to change to other grades of paper not requiring spruce. Aldrich presently took the floor and delivered a strong indictment of Canada, which country, he said, had recently "officially announced" its purpose to transfer the pulp-and-paper industry north of the border. H e asked rhetorically whether we should help this effort to destroy our economy. Asserting that the Mann Committee had not given sufficient consideration to the difference in wood costs, confining its figures to the differential in labor and materials (ascertained to be $2.00 on the ton), he maintained that the Finance Committee's investigations had disclosed a differential of $4.00 per ton of paper in the cost of wood. It was this differential, disregarding the Mann Committee's figure, which the Finance Committee suggested as the duty, despite the fact that it did not account for all the difference in cost of production. Referring to provincial export restrictions as "the methods of the middle ages," he announced that "if all they have to do is to make a threat of this kind and the American Senate prostrates itself before them, then we will reduce this duty or repeal it. If we intend to protect this great industry in the United States, then we ought to strengthen the duty. W e ought to put upon the importation of pulp and pulp wood and

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paper in the United States such restrictions as will notify the Dominion of Canada that this is not entirely a one-sided proposition, that we have some interests to serve, and that we have some rights to maintain on this side of the line . . ." H e also indicated that the committee proposed to apply the new maximum and minimum provisions specifically to pulp, paper, and wood from Canada. These stated that in case of undue discrimination by any country or province against American products, an added levy of 25 per cent ad valorem might be charged as a maximum duty after March 31, 1910. This could be used as a club to prevent such actions as the threatened Canadian export restrictions. Aldrich, however, was fearful that such general regulations might not suffice to ward off the Canadian danger, and so it was proposed to add amendments "safeguarding the interests of the United States with reference to these discriminations, and not to leave it to maximum and minimum provisions" alone. After some further debate the LaFollette amendment was rejected and the Aldrich proposal of $4.00 per ton adopted in Committee of the Whole. 31 The following day Aldrich offered his substitute for the wood-pulp provision. It continued the rate of one-twelfth of a cent per pound, or $1.67 per ton, as of the House Bill, but in addition to the Mann Committee's conciliatory proviso remitting this in return for Canada's abandonment of export restrictions, it imposed a countervailing duty equal in amount to any possible export levies, plus a retaliatory proviso doubling the duty on pulp in case the exportation of pulp, logs, or wood for use in the manufacture of pulp should be prohibited. Thus the net result of the Finance Committee proposals was to withdraw half of the Mann Committee's $4.00 quid fro quo on newsprint, and on pulp to add a double club of countervailing duties to forestall export taxes and of doubled duties to forestall export prohibition—these to be invoked unless provincial restrictions were removed, as an alternative to the

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Mann offer to remove all duties if restrictions were removed. H e admitted that his proposals would impose a penalty on the American people if it were necessary to import these articles, but held, contrary to the Mann Report, that domestic spruce would last indefinitely, and insisted that he was "simply asking them, in a persuasive way, to remove unreasonable restrictions which they are placing upon the export of articles to the United States." His scheme, in a nutshell, was that unless Canada was willing to let her pulp and paper come to us without export restrictions, she must expect to push them into the United States over a slightly higher tariff wall. Somewhat later he proposed the addition of a countervailing duty to the print-paper section (which, it will be noted, had already been adopted) adding to the proposed $4.00 duty the amount of any export charge on wood, pulp, or paper exported to this country, and a further retaliatory proviso that if the President proclaimed any export prohibition or restriction to be unduly discriminatory against the United States, the duty should be doubled. T h e retaliatory duty on pulp was at the same time changed to depend upon presidential proclamation. A f t e r conference with Brown, the latter introduced two proposals, the first admitting pulp free until the President proclaimed undue discrimination, whereupon $1.67 per ton would be levied. T h e newsprint rate was left at $4.00 until a presidential proclamation of undue discrimination, whereupon it would be doubled. T h e effect of these would be to make retaliation dependent upon presidential proclamation rather than automatically operative. Brown also pointed out that his amendments opened the way to exploration of the whole question by the President in conjunction with other interested governments. T h e Brown substitutes were agreed to without debate, and went into the bill as it passed the Senate.32 In the Conference Committee report (which became the

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Payne-Aldrich Act of August 5, 1909) the section on pulp resembled the final Aldrich version except for the retaliatory provision: mechanical pulp was to be taxed $1.67 per ton, but to enter freely from any area not limiting the exportation of printing paper (paper had not been included in the original Aldrich version), pulp, or wood; the countervailing provision was retained, but the retaliatory clause doubling the duties upon presidential proclamation of undue discrimination was omitted. T h e paper rate was changed from $4.00 as originally passed by the Senate to $3.75, with a surtax of $2.00 additional, plus the amount of any export levy, in case of export restrictions. T h e larger retaliatory aspects of the matter were taken care of by the general maximum and minimum provisions, allowing the imposition, after March 31, 1910, of maximum duties of 25 per cent ad valorem, above the regular duties, against any area which unduly discriminated against the United States. More immediately, the countervailing and surtax provisions might involve complications with the Canadian Provinces, Ontario (which had forbidden exportation of Crown-land wood) and Quebec (which had not yet done so, but was considering it, and which already taxed wood exports). Ontario stood to lose by the countervailing duty, and Quebec might well be induced by the same levy to follow Ontario into complete prohibition. It was against this possibility that the maximum and minimum provisions were designed to operate as a club, since further restrictions might, if interpreted as undue discrimination, operate to invoke the maximum rates against Canadian exports to the United States.33 Most immediate of all, however, was the peril to the publishers involved in the $3.75 newsprint rate, which to them constituted an altogether unpalatable alternative to the $2.00 Mann-Payne arrangements. T h e emergence of this grievance must now receive attention. There is no evidence available to indicate that the pub-

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lishers were actively represented before the Conference Committee; the manufacturers' interest was supported vigorously by F r y e and evidently by Hale. T h e trade press gives him fulsome praise for his work in maintaining a high rate on newsprint, though the evidence is not so clear from other sources. Payne seems to have offered to split the difference between the House and Senate rates and settle on $3.00, but, as he reported to the House, the Senate conferees refused because of the alleged higher cost of wood in the United States. It was at this point that Frye's influence was apparently exerted. Taft's letters contain a number of references to his desire to hold the rate at $3.00; he seems to have been impressed with the need for a fairly high figure by LaFollette. A s the Conference Committee wrangle wore on, other items such as lumber and hides bulked larger, and the print-paper matter tended to recede into the background in his correspondence; indeed, he must have agreed to the $3.75 rate some days before the report was completed. Mann also appeared before the committee, but his testimony was evidently not given much weight; Payne considered that the Mann proposal of $2.00 per ton was more a diplomatic move to induce Canada to relax her restrictions (as indeed it was) than a reflection of actual cost differentials. O n the whole, the higher Senate rate would appear to be the result of the predisposition of its leaders toward the protective principle combined with the aggressive activities of certain Senators and the indifference of the publishers, this last perhaps due to their not knowing much of what was going on in the Conference Committee.84 T h e feature of the debate on the Conference Committee's report was Mann's attack on its paper provisions and his vote against it because of them. H e expressed satisfaction with the pulp provisions, which he had drafted for the committee and which allowed free importation from those Provinces which

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removed or did not impose restrictions on the exportation of wood, pulp, or paper. T h e paper clause and the maximum provision, however, destroyed any possible good effect of this. T h e maximum tariff, he pointed out, would make the duty on pulp $1.6J plus 25 per cent ad valorem on pulp worth currently $20 per ton, or $6.67. H e compared favorably the conciliatory aspects of his own proposal of $4.00 reduction on newsprint with the Senate scheme, which would have raised the duty from $6.00 to $8.00, and with the conference measure, which would leave it, if the Canadian restrictions were not removed, at $5.75, or at $3.75 if these were removed. H e gave his "deliberate judgment . . . that under the provisions of the House bill no new restrictions upon the exportation of pulp wood would have been imposed by the Canadian Provinces and the existing restrictions would have been removed and that our print-paper industries would have obtained a plentiful supply of pulp wood from Canada at reasonable cost for all time . . ." H e repeated on another occasion his belief that Canada would have accepted his proposal and the Provinces would have removed their restrictions had the $2.00 rate on print-paper been enacted into law. 35 H e believed that the scheme as it stood would cause prohibition or further restriction of pulpwood exports and thus raise the cost of newsprint in the United States by creating a scarcity of raw material. H e also pointed out a joker in the maximum tariff clause, in a statement that our minimum rates should apply only so long as the President was satisfied that another country "imposes no export duty or prohibition" upon exportation of goods to this country. This, he said, was inserted into the bill in the conference, and was aimed at imposing the maximum tariff on pulp and paper coming from Quebec. H e dubbed the whole scheme a big stick waved at Canada, in contrast with his own olive branch, and warned his hearers of the wrath to come when the publishers began paying the higher paper prices in-

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evitably in store. T h e conference report presently passed the House, with Mann one of twenty Republicans who failed in a parliamentary maneuver to send it back to conference.36 T h e immediate results of the tariff legislation were as follows: T h e Canadian Provinces refused to submit to the PayneAldrich club and relax their export restrictions. This meant that print paper coming from Crown-land wood cut in Ontario and Quebec paid $5.75 after August 26, 1909, when a Treasury Department ruling imposed the $2.00 surtax. Ontario wood pulp continued to pay $1.67 on entry into the States; that from Quebec paid $1.92, thanks to the countervailing provision which added her twenty-five cent export levy. O n September 6 Premier Gouin announced prospective prohibition of exportation of Crown-land wood. Fundamentally the relations between the United States and Canada had been endangered by the possibility of imposition of the maximum rates against the Dominion on March 31, 1910, which in the case of paper would make the duty approximately $14.50 per ton. A l l in all, the manufacturers had won a considerable victory. Paper duties had been cut only slightly, pulp duties not at all. Canada, the essential source of raw material, had been antagonized and an international problem had been created. Publishers' first reaction to all this was, in effect, "it might have been worse," and a search for a scapegoat. T h e luckless T a f t bulked too large to miss, and as time passed he became increasingly the object of their attention in an effort to persuade him to further action. It is not uninteresting to note that the publishers appropriated the Mann Committee proposals unto themselves and by September were talking as if these had all along represented their desires, whereas previous pages have indicated that the Mann proposals marked only a way station on the road to the free pulp and paper which had been the publishers' original goal. 37 T h e reader who has not lost himself in the details of hearings and debates will discern in the recent story a tug-of-war

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which, while see-sawing back and forth, has not yet resulted in victory for either contestant group. Publishers' pressure activated the Mann Committee, originally designed as a piece of Fabian tactics by the harassed Republicans wary of tariff legislation in a presidential year. Its initial report put the manufacturers ahead. Its final report, issued on the eve of a general revision, caused a mild surge toward the publishers by conditionally recommending downward revision. Alarmed, the manufacturers nerved themselves and, with the aid of friends in the Senate, virtually eliminated downward revision on their items. As the chapter closes, the issue is still in doubt with manufacturers resting in their places and publishers digging in for another pull, hoping to catch their adversaries off balance.

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concerned primarily with the tariff, have been developing international overtones. These over. tones tend, until the end of 1 9 1 1 , to usurp the main theme. T h e newsprint question, indeed, becomes so enmeshed in the tangles of Canadian-American relations that its role, though important, becomes secondary. This is due partly to the facts of the case and partly to the not-unadroit tactics of the publishers, who found in reciprocity a means of achieving their personal ends while appearing to be contending unselfishly for the American farmer and a great public principle of international comity. With free newsprint a happy incident of the reciprocity legislation, the publishers had only to press their temporary victory to a more permanent one in the Underwood Tariff of 1 9 1 3 . Against this background other decisive events have come to pass. T h e American producers, seeing the handwriting traced dimly on the wall in the Payne-Aldrich Act and limned more definitely by reciprocity and depletion of the domestic spruce supply, began to transfer their pulp plants and later their paper mills to Canada, avidly abetted by their Canadian compatriots. There began thus an infiltration of American capital into the Canadian paper industry which has been one of the most significant developments of the present century and which, while not simplifying the problem of Canadian-American reft E C E N T PAGES,

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lations regarding paper, rendered the tariff decreasingly apt as an instrument toward its solution. T h e first and obvious result was a stimulus to the Canadian industry and a corresponding check to that below the border. Whereas in 1909 the United States had produced its entire newsprint supply, imports then being negligible, a decade later two-thirds of the newsprint consumption came either directly or in the raw state from foreign sources, mainly Canadian, and by 1926 Canadian newsprint production outstripped the record output of United States mills. 1 This shift to Canada ushered in a period of overproduction comparable to that in the States in the eighties and nineties, which helped to hold prices stationary or to force them down. Publishers were therefore reasonably complacent for a time, having won their tariff fight and being saved from high prices by the Canadian production. It is worthy of note, however, that less price reduction than expected resulted from these developments. The period of quietude thus induced lasted until the crisis of war sent prices rocketing and again arrayed the protagonists in line of battle. T w o attempts were made toward the end of 1909 to break the impasse with Canada. One attempt was made by two bills introduced by Mann early in December in line with the publishers' desires. T h e first was a standard free-paper-and-pulp offer in return for removal of Canadian restrictions and prohibitions. This, it will be noted, went beyond Mann's committee proposals. The other would postpone the effective date of the maximum rates from April 1 , 1910, until January 1 , 1 9 1 1 , giving the President time to explore the question of undue discrimination at greater leisure. This would minimize the danger of a trade war with Canada. It fell by the wayside in the face of Cannon's hostility and Taft's desire to postpone tariff legislation pending a report of the newly created Tariff Commission.2 The second attempt proposed to implement the

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threat contained in the maximum provisions of the Payne-Aldrich Act. Gouin had meantime (September 6) announced formally Quebec's plan to follow Ontario in prohibiting exportation of Crown-land wood, though it was presently reported that action would probably be postponed until September i , 1910. T h i s moved Lyman, of the International, to comment on certain compensating features which might render such action of little value to the Provinces. There was first the fact that American forests would supply the market's needs for some years to come; second, many American concerns owned large Canadian tracts in fee, whence wood could be exported free from provincial interference. Again, much wood was already cut and so beyond local control. Finally, he unsheathed the club of maximum duties: " I t would be an unfortunate thing to have to invoke the application of this provision against any of the provinces of Canada on account of their attitude in this matter of pulp wood exportation, but this provision was incorporated into the law for just such a purpose and was so drawn as to exactly cover this particular situation." 3 T h e period following the Payne-Aldrich legislation must have remained one of the least pleasant memories of William Howard T a f t . It witnessed the focussing of several acutely embarrassing factors. H i s Winona speech defending this limping revision did not soothe those honestly aggrieved at the party's failure to keep its promise. T h e revolt against Cannonism and Insurgent recalcitrance destroyed effective control of the House. A mid-term Congressional election impended, with all its latent dangers. T h e newspaper press cloaked its peculiar disappointment at the Payne-Aldrich rates in a general attack on the administration's tariff failure. Added to these factors was the possibility of complications with Canada over the maximum rates. This, however, was also an opportunity, for it afforded a chance to initiate a wider activity in red-

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procity negotiations. Continued newspaper pressure on the President by the disappointed publishers doubtless contributed to his willingness to enter this wider field.4 Manifold pressure was applied during the pendency of the maximum-rate question directed simultaneously at the Administration and at the manufacturers. Ridder's letter of October 1 8 , 1 9 0 9 , sounded a warning note apropos of Taft's ill-advised sanction of the $3.75 rate on newsprint. This rate, Ridder alleged, had prompted Quebec to forbid pulpwood exports, with the result that " T h e country is now in a fair way for a trade war with Canada because of your apparent failure to read carefully the Mann Committee's recommendations . . . W e trust that you can find some method of rectifying the mistake into which you were led . . ." Norris, now referred to in the trade press as "Microbe" Norris, placed alleged evidence of manufacturers' misdeeds under the anti-trust acts in the hands of a United States District Attorney late in December. These concerned the insertion by the mill men of so-called "trade customs" in the annual contracts; the publishers declared that these were instruments of price regulation and suggested a contract form of their own as a remedy, but nothing further developed. While the maximum tariff was still a threat, a proposal was launched to rush through Congress the Mann Bill postponing the effective date of this potential disturber of the Canadian-American peace. At the same time, and later, steps were taken to urge the passage of Mann's other bill providing for free pulp and paper in return for free wood.6 Meantime the President undertook to remove the threat of the maximum tariff. France and the Dominion had negotiated a trade treaty whereby, in return for concessions granted, French goods paid the intermediate scale of the Canadian three-level tariff upon importation into Canada. Study convinced United States tariff experts that unless Canada ex-

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tended to this country concessions in the Canadian market similar to those accorded French products, Canada would be "discriminating" within the terms of the Payne-Aldrich Act, and her goods entering the United States would be subject to the maximum rates after March 31. After complicated negotiations in which Taft took a personal hand, Canada extended to the United States a largely formal concession of intermediate rates which made it possible for the President to announce that there was no discrimination. During the discussion Taft proposed and the Canadians accepted an offer to pursue the question of trade relations on a broader scale, looking toward reciprocity. This episode, while it averted a danger, solved no problems for either publishers or manufacturers. T h e former still had to contend with the Payne-Aldrich rates (though in fairness it should be noted that the Treasury Department restricted the retaliatory aspects of that Act to Crown-land pulp and paper and admitted the products of privately held land at the regular rates) 5 the manufacturers were disappointed at Fielding's statement that he had refused to urge the Provinces to modify their export policies. T h e results of this abstention were quickly apparent. The Quebec Parliament had been in session since March 15, waiting for the cat to jump. On April 1 Gouin announced a ban on exportation of unmanufactured pulpwood from the Crown lands, the effective date being presently set for May 1. This meant that thousands of square miles of timber limits, acquired by United States interests with the intention of exporting the wood, were immobilized unless the situation changed radically. I t ranged Quebec export policy squarely alongside Ontario's, and evidenced anew provincial determination to transfer pulp manufacture to the Dominion. From the standpoint of the present narrative, it meant that further action was called for.® While Taft and his advisers were looking hopefully to con-

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tinued reciprocity discussions within a short time, the publishers returned to the charge. Their immediate objective was the Mann Bill removing duties from pulp and paper in return for removal of restrictions, though in the face of Quebec's action it is difficult to see how this could have been more than a makeweight in the reciprocity negotiations. T h e Publishers' Association adopted resolutions urging its passage, and Ridder wrote T a f t a strong letter in the same vein late in April. 7 Their attitude changed within a few days, for on M a y 5 Charles M . Pepper of the Bureau of Trade Relations of the Department of State, a principal adviser of the Administration through the reciprocity period, told T a f t that they were urging immediate negotiation of a special treaty limited to pulp and paper, with a view to seeking ratification before Congress adjourned. This shift seems to have been based on the feeling that a special arrangement in treaty form might be less likely to precipitate a general tariff discussion and in all probability was an attempt to stampede the Administration into action. T h e only apparent explanation of this volte-face is Ridder's contention that a paper famine was imminent. A strike in the International mills had increased the price of paper on the "spot" or noncontract market by $9.00 per ton within a few weeks, and on March 31 the Commissioner of Corporations reported that the stock on hand in the mills was only 19,907 tons, or less than a six-day supply. Back of this was doubtless the fear that the manufacturers might take advantage of the Quebec embargo to raise the price, though Pepper pointed out that the International had already cut enough wood on its Crown-land limits to maintain production at current levels for a year and a half, and official reports repeatedly indicated that the major proportion of wood imports came from private lands. In advising against this method of procedure, Pepper indicated his belief that the most feasible

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plan would be to include pulp and paper in a general trade discussion, which he hoped might be inaugurated shortly. 8 The Canadians were unwilling to open negotiations, as Pepper had hoped, and the summer saw relatively few .developments. In June, Norris advised the publishers to bear the market in view of increasing production, and in July the paper mills were advised to curtail output, which was done. Prices declined, and stocks accumulated. Pepper explored the possibilities of securing wood from Newfoundland, by means of reciprocity negotiations, in order to build a backfire against Quebec's intransigence.9 This intransigence, however, was manifested again in a second step in the provincial campaign to move the pulp industry northward. In midsummer (effective as of September i ) the provincial authorities announced an export embargo on pulpwood cut from land held on so-called "location tickets." These were documents issued to prospective settlers permitting them to clear one hundred acres prior to actual occupation, and they were susceptible to abuse by those who secured the tickets merely as a means of getting the wood. 10 T h e impression gained ground in some American governmental circles that the Canadian prohibitions were not, after all, likely to be of great immediate influence, since it was estimated that only about 15 per cent of the Quebec pulpwood cut came from Crown lands. This, added to the enormous supplies stacked up prior to M a y 1 , led Pepper in September to repeat his earlier judgment that the government should not yield to publishers' pressure for a separate and special treaty, but should persuade them to wait on a general reciprocity negotiation. This did not prevent Ridder from circularizing his constituents in the same month with an appeal to obtain from their Congressional candidates assurance that they would favor "the immediate adoption of a reciprocity agreement with Canada and Newfoundland . . . "

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upon the same terms as the Mann Bill, still gathering dust in a committee's pigeonhole. 11 T h e T a f t Administration, with one eye on the November election, sought to launch its reciprocity program in October, and the pulp-and-paper question took its place along with other considerations in the larger program. Pepper was still convinced that provincial restrictions would not affect the supply for an indefinite period; he nevertheless counseled that in the general negotiations the United States should offer to remove the countervailing levies of $ 1 . 6 7 on pulp and $2.00 on paper, and should further reduce the Payne-Aldrich rate on the latter from $3.75 to $2.00. T h e American delegation to a conference held at Ottawa early in November carried instructions calling for a $2.00 rate on newsprint coming from Provinces laying no export restrictions. This offer was coupled with others relative to manufactures which gave the Canadian negotiators pause and precipitated a contest of maneuver in which the paper question, as far as the record shows, received only incidental consideration. T h e meeting terminated without decisive action on the main issues, though the $2.00 rate on newsprint was tentatively agreed upon and the Canadian delegates left the way open for later discussion of pulpwood. Conferences were resumed in Washington on January 7, 1 9 1 1 , and continued through the twenty-first. T h e agreement was announced on the twenty-sixth in the form of proposals for concurrent legislative action rather than a treaty. T h e American delegation proposed the $2.00 rate on newsprint, with removal of countervailing levies, but a loophole was left whereby this might be modified "if in view of the unwillingness of the Canadian Provinces to remove their pulp-wood restrictions except in return for outright free paper the President thinks the American publishers are entitled to this concession." T h e Canadians evidently made no concessions, for the scanty records available show that early in the negotiations the

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Americans were thinking in terms of free paper in return for removal of export restrictions. Thus the matter finally stood, Fielding being unwilling to commit his Government to the application of pressure to the Provinces; the whole episode testifies to the fact that "State Rights" is not a peculiarly American tradition. The summarizing memorandum of agreement stated: " W e stand on free print paper, on condition of the removal of restrictions on the exportation of pulp wood by the Canadian provinces. The Canadian negotiators assent to our putting this condition precedent in our legislation, while at the same time not including it in the proposition which they will lay before Parliament . . . " Fielding's letter to Philander C. Knox indicating the Canadian concept of the agreement repeated this idea: "With respect to the discussions that have taken place concerning the duties upon the several grades of pulp, printing-paper, etc. . . . we note that you desire to provide that such articles from Canada shall be made free of duty in the United States only upon certain conditions respecting the shipment of pulp-wood from Canada. It is necessary that we should point out that this is a matter in which we are not in a position to make any agreement. The restrictions at present existing in Canada are of a Provincial character. They have been adopted by several of the Provinces with regard to what are believed to be Provincial interests. We have neither the right nor the desire to interfere with the Provincial authorities in the free exercise of their constitutional powers in the administration of their public lands. The provisions you are proposing to make respecting the conditions upon which these classes of pulp and paper may be imported into the United States free of duty must necessarily be for the present inoperative. Whether the Provincial Governments will desire to in any way modify their regulations with a view of securing the free admissions of pulp and paper from their Provinces into the markets of the United States must be

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a question for the Provincial authorities to decide. In the meantime the present duties on pulp and paper imported from the United States into Canada will remain. Whenever pulp and paper of the classes already mentioned are admitted into the United States free of duty from all parts of Canada, then similar articles, imported from the United States, shall be admitted into Canada free of duty." 1 2 T h e publishers were interested observers of the November negotiations but continued to press for passage of the Mann Bill as a means of softening the price of paper without the risks of a reciprocity treaty.13 They were evidently won over to support of the Administration technique, as they were given advance notice of the terms of the agreement, which Ridder communicated to his constituents two days before they were publicly announced. H e made the point, implicit but not included in any official pronouncement to date, that the agreement provided "for the admission of print paper and wood pulp free of duty when made from wood cut on private lands or free from restrictions of exportation. " I f ratified by Congress, this arrangement will immediately and automatically insure a full supply of print paper free of duty, and will exert a pressure upon the provincial authorities which will ultimately force them to remove their restrictions on exportations of pulp wood . . . " Complacent approbation followed on publication of the agreement: "This draft is entirely satisfactory to publishers. It will provide for the immediate entry of print paper and wood pulp from Canada. The snarl with the provinces of Canada has been completely avoided by an entirely new turn to the stipulations, which now follow the wood—not the province. I f wood is free from restriction, such as wood from private lands, the products of that wood will come into the United States free of duty . . . " 1 4 T h e agreement thus adroitly avoided disturbing Canadian provincial autonomy and won over the Amer-

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ican publishers by giving them access to raw materials free of duty, a cheap price for such powerful support. It remained to convey this gently to legislative ears. On February 4 Secretary Knox wrote Sereno E . Payne, of the W a y s and Means Committee, a judiciously worded hint which was eventually translated into legislation: "Inasmuch as this proposed conditional arrangement has not been accepted by Canada as a part of the agreement, except in the sense that, when, and if, it is made operative by American legislation to secure free admission of these articles into the United States from all parts of Canada, Congress may, without impairing the agreement arrived at by the negotiators, work out this result in its own way. As, for instance, by maintaining the present status until the Provincial restrictions are removed, or, by presently admitting free fafer and fulf manufactured in Canada unaffected by the restrictions, should Congress believe this latter method of dealing with the subject would exfedite the removal of the restrictions15 (Author's italics.) If publishers were complacent, manufacturers were indignant. W h i l e evidently not consulted during the negotiations, their obvious goal would be an arrangement insuring reciprocal concession for loss of protection upon their own product. Instead, they found that any hope they might have of exporting their paper to the Canadian market was deferred by the terms of the agreement to the day when all provincial restrictions were eliminated—an extremely problematical point of time. Hastings promptly advanced to the defense of his interest, arguing in a letter broadcast to the industry that free land wood was ample to supply its needs for years to come. There was no need, therefore, to seek safety in forcing removal of provincial export restrictions, since a sufficient supply was in sight even if these remained unimpaired. T h e weapon proposed to secure this removal—abolition of protection on paper—would meantime destroy the American in-

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dustry. Effectuation of the agreement would, he asserted, be "the most disastrous blow ever handed to the paper industry of the United States . . . " H e exposed the political motive of the Administration, asserting that " f o r the purpose of getting the influence of newspapers they are subsidizing them through the print paper section of the treaty, for all the rest of the schedule . . . " 1 8 A presidential message of January 26 published the agreement and stoutly defended it, but made no mention of paper. T w o days later a bill was introduced to effectuate its terms. As published, and as the bill was originally introduced, the agreement proposed to admit Canadian pulp and paper (the latter valued at not over four cents per pound) free of duty when no export tax or prohibition was levied upon export, as part of the general agreement, and dependent upon its adoption by both parties. This was referred to the W a y s and Means Committee, where Chairman Payne refused to sponsor it and the duty devolved upon Samuel W . McCall of Massachusetts. T h e Committee heeded Knox's hint to Payne, however, and when the bill was reported back to Congress on February i r , the original provisions had been excised and a new Section 2 had been added carrying the pulp and paper provisions into operation immediately the American Congress acted, and regardless of Canadian acceptance or rejection of the agreement as a whole. 17 Meantime a storm was gathering about the agreement which the present narrative, being devoted to newsprint, must endeavor to avoid while listening to its rumblings. H i g h among the particulars of reciprocity was the mutual free admission of many agricultural products. Likewise some rates on manufactures were reduced. These proposals frightened the American farmer and manufacturer alike: the farmer because he foresaw an influx of Canadian wheat, pork, and barley, and the manufacturer because he saw in the reduced

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rates a break in the protective dike behind which his infant industries had approached robust adulthood. A remarkable phenomenon ensued. The protected interests developed a previously unparalleled solicitude for the farmer, about to be submerged under an avalanche of foreign foodstuffs. The farm press responded to the stimulus so thoughtfully provided, and a hue and cry was raised against the agreement, a hue and cry which the American Protective Tariff League regarded with benevolent complacency. Less complacent, however, were the mid-western Insurgents, who had led the van in opposing the Payne-Aldrich Tariff as an inadequate measure of reform, now unhappily forced to oppose tariff reform d la T a f t since it was objectionable to their constituents. The McCall Bill moved to passage against this background. The Ways and Means Committee hearings, February 2-9, were devoted mainly to opponents of the proposal, though Norris and Seitz appeared to express the publishers' approval. They served mainly as a sounding board for assertion and counterassertion, with little new material on either side. Norris referred to the agreement optimistically as "the greatest economic advance that has been made by the United States in the present generation . . ." but was vigorously heckled by both Democrats and Republicans. The bill passed the House and went to the Senate, where it fell between the stools of Republican hostility and a press of end-of-session business and failed to pass, despite stout publishers' propaganda on its behalf. On February 9 Norris called publishers' attention to the benefits the bill would confer through "providing for free print paper when made from free wood." Enclosures were broadcast to publications in several agricultural states, which were intended to enlist farm support but which failed to mention the advantages which would accrue to publishers through the agreement. Norris seemed mildly surprised later when this oversight was called to his attention. On the seven-

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teenth Ridder sent out a communiqué which was to plague him later: "By request, private to editors. It is of vital importance to the newspapers that their Washington correspondents be instructed to treat favorably the Canadian reciprocity agreement, because print paper and wood pulp are made free of duty by this arrangement." 18 The President called the new Congress in special session on April 4 to made amends for the failure of the preceding Congress. Its House was Democratic, thanks to the 1910 elections, and the Democrats would support tariff reform even at Republican hands; the difficulty was that they wished to go beyond reciprocity and enact further reforms, which the President insisted should await a report from the new Tariff Commission. However, he could count upon staunch support of reciprocity, and the bill was introduced again, this time under the sponsorship of Oscar Underwood, and passed the House promptly on April 21. The debates barely mentioned newsprint. It was the Senate again which became the crucial battleground, and through the long weeks of a hot Washington summer weary hearings and sultry debate moved reciprocity slowly forward. T a f t marshaled all his resources for the fray, appealing, as did his opponents, to the farm interest to support his scheme. Senate Hearings, opening in May and lasting into June, offered all hands another opportunity to rehearse oft-repeated lines, the main difference between these and previous performances being a somewhat greater emphasis by the manufacturers upon the inevitable destruction of the domestic industry if reciprocity were enacted. The curious discrepancy between publishers' interests and publishers' propaganda was again brought out. Ridder's "By request, private to editors . . ." dispatch was called to his attention by Senator F. M . Simmons of North Carolina, who noted its frank avowal of self-interest. The Senator then asked, . . do you think the newspapers of your association

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have stated to the people with equal frankness the reason why they are favorable to it?" A f t e r some squirming, Ridder admitted that he could not name a single paper which had editorialized so frankly. 19 T w o developments occurring during the Senate Hearings merit brief mention. O n M a y 17 the Tariif Commission presented a report of its investigation into the pulp-and-paper situation indicating that newsprint cost $32.88 to produce in the United States as against $27.53 in Canada, a differential of $5.35 (of which the cost of wood accounted for $4.71) in favor of the Dominion. Although this would normally have been considered a good Republican argument for protection against a cheaper foreign commodity, the exigencies of the situation transformed it into a plea for reciprocity as a means of cheapening cost to the American consumer.20 T h e other was the presentation to the committee of the so-called "Root Amendment," which had been before the Senate in the regular session, but which received more attention at this time. Elihu Root represented N e w Y o r k , whose many papermakers would be adversely affected by reciprocity. In their interest, if not, as charged, at their direct instigation, he proposed to amend the bill to make it conform to the agreement as originally drafted, so that no pulp or paper should enter from Canada until all provincial restrictions had been removed. This of course was a threat to all the publishers' plans and as such constituted a grave danger. T a f t admitted privately that it was in accord with the agreement, and evidently agreed tacitly to its introduction. W h e n its full potentialities became apparent, however, he worked on Root to abandon it, to no avail. Root appeared before the Finance Committee to urge it, and it came to a vote on the floor, only to be defeated (June 22) after occupying the Senate's attention for parts of three days and receiving Root's somewhat apologetic support. A t about this stage of the debate reciprocity became entangled

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with Democratic efforts at piecemeal tariff revision, and passage was delayed until July 22, with final signing on the twenty-sixth. T a f t had won the battle which would do much to defeat his party in 1912, as the whole episode had pounded deeper the Insurgent wedge driven into Republican solidarity during the Payne-Aldrich debate. The publishers' fight was also victorious, as Section 2 allowed immediate entry to the products of wood from privately held forests.21 The manufacturing interest was more or less resigned to passage of the Act, but not pleased with the prospects. The Paper Trade Journal commented: " A gift of the news print industry has been made to Canada, to please the newspaper publishers of this country . . ." Though this doubtless reflects the exaggeration of immediate dejection, it is a fact that reciprocity marked a step in what was doubtless an inevitable northward procession. For at least two decades American papermakers had been discounting this prospect by investment in Canadian timber limits. Even the slight reductions of the Payne-Aldrich Act, combined with Quebec's new policy, accelerated the process. Reciprocity stimulated it still further by calling general attention to newsprint, and Canadian and American capital rushed into the paper-and-pulp business in unprecedented volume. In mid-December, 1911, it was reported that within the past seven months since the passage of the Reciprocity Act eighty-one new concerns capitalized at over eighty-three millions had been incorporated, forty-nine of them (twenty-seven in Canada and twenty-two in the States) with over forty-one millions of capital. This optimism was eventually to be reflected in the overproduction of the 1920's, but at the moment prospective profits outweighed caution. One immediate hope of the publishers was not realized: reciprocity did not reduce the price of paper, since Canada was not at once equipped to produce on a scale sufficient to compete in the United States market. Supply and de-

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mand were in close balance during 1 9 1 1 , and prices held fairly even throughout the year. This in turn meant hope again deferred for the publishers, despite their victory in reciprocity, and made necessary the waging of one last round in the battle for free newsprint in the Underwood Tariff of 1913. 2 2 Little occurred in 1 9 1 2 . T h e papermakers appointed a committee to secure repeal of reciprocity, but the matter was not pushed vigorously, and although nine bills to this effect had been introduced by April 24, only one reached the discussion stage, and it specifically excepted Section 2 from its operation. A considerable number of efforts were made to induce T a f t to recommend repeal as a means of regaining farm support in the election of 1 9 1 2 , but he refused to be moved by this consideration, and the offer remained on the books. After the election one trade journal remarked that he had probably done his worst to the industry, which might, however, expect worse from his successor.23 One aftermath was that several European nations claimed the right to send goods to this country duty free on the strength of the gratuitous concession to Canada contained in Section 2 and the most-favored-nation clause of their treaties with the United States. The State Department recognized the obligation, but the Treasury Department wanted the income. The matter was finally referred to the courts, which in 1 9 1 3 upheld the claimant nations, and small amounts of pulp and paper from six of them claimed free entry until the Underwood Act of 1 9 1 3 went into effect.24 T h e effect of reciprocity on prices became apparent during the year, which saw largely increased Canadian production. A drop of about three dollars per ton was registered, and prices remained low into 1916. 2 5 Canadian imagination was equal to the task of evading the Payne-Aldrich restrictions on Crownland products by the end of the year. Quebec producers, emulating an earlier example in British Columbia, prevailed upon the Government to remove its restrictions upon exportation

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of logs cut from the tracts of the four leading paper producers. These producers had no intention of exporting logs, but removal of the restrictions permitted them to claim free entry for their paper, which was accorded by the United States.28 Faced by the increasing influx of Canadian paper produced at cheaper prices, American high-cost mills began shifting to other grades of paper on which the margin of profit was greater.27 Woodrow Wilson's victory in 1912 made tariff revision inevitable. Chairman Underwood of the Ways and Means Committee inaugurated hearings before the new Administration took office, and the paper sections of the tariff came under review on January 17, 1913. By this time the manufacturers were in a well-nigh hopeless position. Reciprocity allowed free pulp and paper from private Canadian holdings} Quebec was on the way to short-circuiting the Payne-Aldrich barrier against Crown-land products} the favored nations were clamoring at the gates. Small wonder that one witness referred to the paper industry as "the poor relation at the tariff table, its place being very far below the salt . . ." The fact that it was likely to be joined by a host of other poor relations under Democratic ministrations failed to mitigate the circumstances, and the hearings opened with the manufacturers distinctly on the defensive.28 Hastings tempered his argument to the wind of congressional opinion and asserted that papermakers wanted no change unless the committee should find that increased duties would bring increased revenue. H e proposed that if any area should forbid or restrict the importation of paper, pulpwood, or mechanical pulp, similar restrictions should be imposed upon like importation into the United States plus a countervailing levy to the amount of any export charges. Elon R. Brown, another manufacturers' spokesman, would repeal Section 2 of the Reciprocity Act and leave the Payne-Aldrich regulations intact. The perennial Norris sailed

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a new tack, charging the domestic manufacturers with exporting low-priced newsprint to almost the amount of increasing Canadian importations, with the object of starving the local market and so offsetting these importations. H e urged removal of all duties and restrictions upon entry of newsprint and its constituent pulps. Norris and the International exchanged the usual courtesies. When the bill was reported on April 22 the manufacturers' worst fears were realized: its practical effect was to remove all bars from the free entry of newsprint and mechanical pulp from any part of the world; although countervailing duties were proposed to apply to any areas levying export taxes, these were meaningless, since none were then in effect.29 Publishers must have been supremely confident of the outcome, for the next day the Paper Committee asked the annual convention of the A.N.P.A. to bring its functions to an end with the signing of the new tariff.30 The House debate dealt mainly with the retaliatory aspects and with the question whether passage of the bill carried with it repeal of Section 2 of the Reciprocity Act, and, if so, whether the rest of the reciprocity offer was thereby withdrawn. As passed by the House, no provision was made for a retaliatory levy in case Canada imposed an export duty on paper, newsprint being on the free list; retaliatory provisions were applied to paper valued above two and one-fourth cents per pound, of which no great amount was imported at the time. The Reciprocity Act had admitted newsprint freely up to a value of four cents per pound. Adoption of the Underwood top limit of two and one-half cents left paper valued between these levels subject to duty and so rendered Section 2 nugatory. W . S. Hammond, in charge of this schedule in the House debate, gave his personal opinion that repeal of Section 2 carried the whole legislation with it, but declined to speak except for himself. When the pulp section came up it was proposed to put both chemical and mechanical pulp on the free

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list, but in case Canada put an export levy on newsprint or mechanical pulp, retaliation would go into effect upon chemical pulp, of which Canada at that time produced little. Mann attacked this failure to provide retaliatory measures as leaving no means of preventing Canada from monopolizing the pulpand-paper business by taxing or prohibiting exports of newsprint and mechanical pulp. The House passed the measure as just outlined and the same questions were raised in the Senate about the failure of the bill to protect the supply of raw material for American mills against possible provincial interference. Henry Cabot Lodge of Massachusetts charged that it was a scheme "to enable Canada to force the erection of paper mills by American capital on Canadian ground . . on the part of "certain great newspapers . . ." seeking to secure cheap paper even at the cost of destroying an American industry. An amendment presently eliminated even the retaliatory provision relative to chemical pulp, and the bill passed to the echo of Smoot's apostrophe to John Norris: " I think perhaps it would be perfectly proper now for me to extend congratulations to Mr. John Norris upon the successful conclusion of this long fight; and the Newspaper Publishers' Association ought to increase his wage from now on . . . my friend Norris is safe in leaving the Senate gallery, in abandoning the corridors of the Capitol, and going back to New York to-night and reporting the successful termination of the fight he has been waging for so many years . . . " 3 1 The A.N.P.A. commented comfortably on the Act, signed October 3, 1913, that it "admits free of duty news print paper and wood pulps from all parts of the world and without qualification of any sort. The purpose of the creation of the Paper Committee has been accomplished. The market for paper buyers has been broadened to the utmost. Retaliation against foreign countries in pulps and paper supplies has been stopped. The days for a tax upon knowledge

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are gone . . . Publishers are to be congratulated upon the end of the contest. Uncertainty is over . . ." 82 The same Bulletin carried notice of Norris' resignation from the Committee on Paper which he had served so long and so successfully. Thus ends the story of the fight for free newsprint so closely identified with the name of John Norris since the 1890's. No student of his career would deny the singleness of purpose with which he pursued his goal, though one may well share the impatience which his enemies, and those who heard him through long hours of propaganda, developed at his long and sometimes disingenuous harangues against the evils of the "trust" and the benefits of free trade. The story itself, drawn out though it has been in deference to the importance of the tariff fight, must still be viewed in the perspective of the larger study; it marked an episode in a series of swings of the pendulum, prepared by Norris's groundwork, initiated by Herman Ridder as a result of fear of high prices in 1907, and carried through fundamentally as a means of lowering prices. That it contributed largely to the transfer of the industry to Canada (an eventuality doubtless inevitable anyway) was probably incidental to its prime movers. That it did not immediately contribute to their prime goal, reduction of paper prices, was undoubtedly a source of unhappiness to them; prices remained virtually stationary through 1913, 1914, 191J, and well into 1916, though the signs of a new boom were on the horizon by the close of 1915. It was finally the crisis of war and its economic accompaniments which raised prices once more and so ushered in the next round in the long contest between publishers and manufacturers, to which we now turn.

CHAPTER

VI

World War and Aftermath, 1914-1921 H E YEARS from 1 9 1 4 through 1921 opened with a period of low prices and high Canadian production which constituted a logical accompaniment of the industry's northward march following removal of the tariff. T h e outbreak of war in 1 9 1 4 found the United States at a low ebb economically, and after a momentary spurt all hands adopted a wait-and-see attitude. War-born prosperity was disturbed by two price crises, each invoking publisher-instigated attacks on the manufacturers. Involved also were government efforts to improve the situation, including arbitration between the parties, investigation of conditions, and a prosecution of the manufacturers for violation of the anti-trust laws. T h e period also discloses a widening breach between the large and small press and at least some tentative efforts to compose differences between the former and the manufacturers. At the end a renewed gesture of pressure on Canada to remove export restrictions ends in failure.

T h e period between the revolution in the newsprint tariff and the outbreak of war in 1 9 1 4 , while too short to establish trends, reflected changing conditions. The threat of Canadian competition discouraged the building of additional news mills in the States. Both Canadian and American capital went into Canadian enterprises on a considerable scale until early in 19x4, when it was reported that Canadian banks were declining to make further advances on new properties. The Cana90

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dian industry was expanded more rapidly than American market conditions warranted. In February, 1 9 1 4 , the International reported to its stockholders: "That the future growth of your company must be largely in the development of its Canadian properties is more a cause for concern to labor and the public generally than to you." Some mills turned to other grades of paper where the margin of profit was greater than on news, and some water power was diverted to production of electricity. Imports of Canadian paper increased enormously, multiplying fivefold between 1 9 1 2 and 1 9 1 4 . Such a striking increase, while doubtless in part a reflection of reciprocity and its aftermath, would hardly have developed entirely from the products of the free forests opened by the Act of 1 9 1 1 5 tariff removal played no inconsiderable role. Withal, the price of newsprint sold on contract (about 90 per cent of the American consumption was thus sold at this time, leaving only a small remainder to be disposed of on the open or spot market) remained remarkably steady to June, 1 9 1 6 , at slightly under two cents per pound. This steadiness tended to belie the claims of those who had urged removal as a means of lowering prices. Thus it would appear that the outbreak of hostilities in the summer of 1 9 1 4 found the newsprint industry seeking an even keel after recent disturbances.1 T h e American economy was not in a flourishing condition when Europe went to war. Papermakers, however, found themselves fairly well situated, with demand good and stocks of materials high. President Philip T . Dodge of the International could therefore cable from London directing his subordinates "to protect at all hazards the interests of our contract customers, and having done this to assist to as great an extent as conditions will permit such of our competitors' customers as may ask for assistance, but under no circumstances to take any unfair advantage of the situation." One of these subordinates assured the Publishers' Association that

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manufacturers were "never better prepared to take care of a situation such as the present one . . . there is not the slightest indication of a desire on the part of the paper manufacturers to take any unfair advantage of existing conditions. The producer and consumer of Print Paper should work hand in hand and in the closest harmony." A momentary rush of business lasted through August, 1914, and was followed by precautionary measures which, with some minor fluctuations, held the market steady until late in 1915. By this time the paper market began to reflect business improvements, shortages of various materials entering into manufacture, and the increased demands of world-shaking events upon the supply of newsprint. Before these signs became apparent, however, most of the supply had been placed under contract for 1916 at prevailing prices, so that the boom which developed midyear, and whose signs had been preparing late in 1915, applied mainly to the spot market. It was this boom which brought the first great price crisis of the period covered in this chapter and so brought publishers and manufacturers again face to face.2 Against this shifting background the manufacturers had already taken steps which would have aroused the publishers and created a crisis in any case and which eventually ran the mill men foul of the anti-trust laws. It was probably inevitable that a cheaper Canadian product would drive American mills to curtail production or divert machines to other grades of paper. It was probably just as inevitable that the publishers would attack these actions as collusive efforts to rig the market. As early as January, 1914, publishers were accused of launching reports in Washington pointing to a "comprehensive agreement both as to prices and markets between the United States and Canadian paper mills." About a year later the Pafer Trade Journal carried a condemnatory editorial campaign urging that the Sherman Act be enforced or repealed. In March, 1915, the Publishers' Association charged

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that manufacturers were trying to establish uniform prices but had not yet succeeded completely. And on April 1, 1915, the News Print Manufacturers' Association was established, including most of the producers on both sides of the Canadian border. This was a deliberate effort to rectify the conditions of oversupply which had characterized the market for the past several years by reducing competition among the members. T h e organization operated through a secretary, M r . George F . Steele, whose office provided the statistics necessary to the operation of the scheme, and an executive committee of five representing 82 per cent of the Association's production. In September, 1915, arrangements were completed whereby three American concerns took over sale of the products of a number of Canadian mills in an effort to stabilize prices by preventing consumers from playing one supplier against another. Later in the autumn the Publishers' Association began asking its members for information which would support charges of collusion among the mills. 8 T h e year 1916 saw a trend toward manufacturers' control of the market. Profits had been considerable while costs of production were fairly stable until the second half of the year. Demand and supply had been approximately in balance as 1915 closed. T h e new year saw considerable prosperity, accompanied by an advertising boom which caused the large newspapers to make heavy demands upon their suppliers. Previous competitive conditions had made it possible for publishers to exact favorable contract terms from the mills, both in price and volume of deliveries. T h i s favorable position had fostered careless use of paper, and soon the larger publishers found themselves unable to meet their needs under contract terms. T h e y then competed in the spot market for the small proportion of the supply there was available. T h e y could well afford to pay high prices for small lots, as cheap contract deliveries still left a low average cost. Smaller papers, however, dependent upon the spot market, found

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their costs rising to unheard-of heights. Jobbers increased their prices, and a panic market shortly developed, with manufacturers and middlemen reaping a golden harvest. Paralleling these developments, the mills inaugurated new sales policies which added to publishers' costs by setting selling prices f.o.b. mill rather than delivered to railroad siding or pressroom. By the end of the year, when large contracts were up for renewal, the manufacturers found themselves favorably situated, with high prices, tighter contract terms, and a large demand. By the same token, both large and small publishers felt the pinch of manufacturers' exactions.4 Under these circumstances there developed for a time a divergence of interest between the large publishers and their smaller compatriots. The large users of newsprint, protected by contracts until the end of the year, felt the pressure of price increases less quickly than the smaller papers which bought on the open market.5 Secretary Steele of the News Print Manufacturers' Association began early in 1916 to harp on the fact that the situation was becoming critical. The Publishers' Association took note of the matter by running a strong campaign urging economy of consumption on the part of all papers, but its official publications for months studiously avoided the question of combination among the mills.6 On April 5 Steele promoted a meeting between his association and the publishers to discuss matters, but it accomplished nothing. Presently the small publishers began to make their influence felt in Congress. The impetus seems to have come largely from Oklahoma, whose Senator Robert L . Owen introduced a resolution which the Senate adopted on April 24 in the following terms: "Resolved, That the [Federal] Trade Commission is hereby requested to inquire into the increase of the price of print paper during the last year, and ascertain whether or not the newspapers of the United States are being subjected to unfair practices in the sale of print paper." 7

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Thus was launched a far-reaching investigation, freighted with heavy consequences of ill-will between the manufacturers and government, which was to eventuate in prosecution of the N . P . M . A . under the Sherman Act. T h e inquiry started with the manufacturers indicating their good-will toward the publishers, and expressing their anxiety to co-operate with government. Steele's weekly letter to his constituents expressed the feeling that recent attacks had been made by irresponsible publishers, "and certainly not by the American Newspaper Publishers' Association, with which body we are on the most amicable terms. W e are particularly pleased with the fairness and squareness displayed by M r . L . B. Palmer, the efficient manager . . . in his relations with us." T h e Executive Committee petitioned the Commission for a hearing, alleging that their Association had been "grossly misrepresented . . ." in recent days, and Steele tendered "all the facilities of our organization, and [we] hope that our assistance may facilitate the investigation both in point of time and expense." 8 T h e Trade Commission started its investigation forthwith, and at first received the cordial co-operation of the Manufacturers' Association, while the market rapidly passed into a runaway stage in the summer. (In mid-July Steele reported that "there is no open tonnage of which we have knowledge anywhere on this continent today.") T h e inquiry was made by questionnaire to publishers and manufacturers, and by examination of the industry's books as far as staff limitations permitted. Publishers were asked to submit details of all contracts entered into since the beginning of 1913 and of all spot market purchases, together with any information which might support allegations of irregular procedures among the manufacturers. 8 T h e inquiry gathered momentum during July, and on August 1 a public hearing was held at Washington. President Dodge presented the point of view of the International, and the Publishers' Association was represented by Col. F . P .

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Glass, Chairman of a re-constituted Paper Committee, though none of the great dailies sent a spokesman. By this time the publishers, if Glass represented them, were suspicious of the manufacturers. H e reported "many evidences of a concert of action . . . " but admitted lack of "legal proof of a combination or a conspiracy . . . " affecting output or prices. Publishers, he said, were doing their utmost to secure proof of collusion. 10 T h e Publishers' Association's first open suggestion that all was not well within the industry came on August 17, when a telegram to members announced that "Monopolistic prices now prevail . . . " Shortly after this (August 29) the Trade Commission pointed out to the manufacturers that evidence indicated that small publishers were paying exorbitant prices, and asked what their Association could do to assure such papers of adequate supplies and to protect them against excessive prices. O n September 6 the manufacturers submitted their new contract form, with its added burdens on publishers; the following day Senator Duncan U . Fletcher of Florida secured passage of a Senate Resolution calling for a broader investigation of the paper industry than that under which the Trade Commission had been operating since April. Following an amicable meeting in New York on September 14 between Trade Commission, publishers, and manufacturers, the latter drafted a reply to the Trade Commission's earlier suggestions. From this point forward the tempo of events speeds up, with pressure on the manufacturers becoming more and more severe, and with publishers becoming increasingly alarmed at continued high prices as the time for contract renewal approached. 11 In mid-October Steele reported that he had received within the past two weeks over fifteen hundred "radical and abusive" articles regarding the oppressive tactics of the manufacturers. About the same time the Publishers' Association engaged the

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services of A. G. Mclntyre, a Canadian and former trade journal editor, to take charge of its paper interests. Late in the month a letter from the Philadelphia North American to Chairman E. N. Hurley of the Trade Commission sharply criticized that body for failing to secure and publish the facts of the paper situation prior to the time for making contracts. Responding to this pressure the Commission on November 3 announced a hearing for December 12, and, without drawing any conclusions, retailed some current facts. These indicated that most contracts had been made at somewhat under $40 per ton, f.o.b. mill, prior to the 1916 boom. The first half of the current year had seen contracts made at $60, the second half at $65, while the spot market ranged as high as $140. The average cost of producing a ton of paper during the first half of the year was set at $33. In the face of these threatening signs the International announced a 1917 price of $65, subject to certain adjustments which reduced the figure somewhat. Meantime, behind the scenes, the Trade Commission seized the confidential files of the President of the International, and in December those of the Executive Committee of the N.P.M.A. And, also behind the scenes, the Publishers' Association was sending its members samples of propaganda to be directed to newspaper advertisers, variants upon the following theme: " M r . Advertiser: M r . Paper M a n u f a c t u r e r is after y o u . H e asks us to collect f r o m y o u thirty to seventy dollars a ton profit for him instead of the ten to fifteen

you have paid h i m . H e has been making fifteen to twenty-five

per cent on his investment, but n o w insists that you buy his m i l l d u r i n g 1 9 1 7 , and let h i m keep it, too. W e ' r e kicking. W h a t are you d o i n g ? "

12

As the hearing approached it appeared that the manufacturers' tactics (the partial responsibility of the jobbers for

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conditions should not be entirely forgotten) had aroused both small and large publishers to a pitch of hostility equal to that of the mill men. The hearing itself, however, developed a further divergence among the publishers. The Trade Commission launched a bombshell at the outset by issuing a set of figures compiled by its investigators showing prices, costs, and profits in the paper trade. Criticism was invited, and the Commission evidently intended to cross-examine the manufacturers, who had had no previous intimation as to what was in store for them, and no advance knowledge of the figures, which, however, they did not challenge. Manufacturers' counsel T . T . Ansberry objected to cross-examination of his clients and accused the Commission of having pre-judged the matter, rendering further discussion useless. Later proceedings made it apparent that the metropolitan publishers were resigned to paying over $60 for their paper, had made contracts satisfactory to themselves, and so were not as completely out of sympathy with the manufacturers as were the small fry of the publishing business, whose representatives made a loud outcry. Their main complaint was the widening of the margin between the price paid by themselves and by the large buyers on contract. After an intermission the Commission asked manufacturers to justify their prices, but again counsel refused to reply, making a counter-request for suggestions as to methods of distribution which would aid the small consumers whose interest was presently most at stake. After a rather hot session in which publishers' disagreement was again apparent, arrangements were made for a further meeting, on December 16, of committees representing small publishers, large publishers, manufacturers, and the Trade Commission. In the interim the A.N.P.A. Paper Committee, its Board of Directors, and some invited publishers met in New York on the fifteenth and adopted a report to the Trade Commission ex-

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pressing their belief that there had been established "some manner of control of paper prices and distribution." Many feared, however, that complaint on their part would endanger their paper supply, and it was therefore hoped that the Commission's inquiry would speedily fix responsibility for conditions. A t the December 16 session the manufacturers' representatives, frankly admitting that it was a seller's market, proposed a scheme whereby the large consumers should release 5 per cent of their contracted supply, which the Trade Commission would then distribute to the small publishers at the contract rate. This of course pinched the large consumers by threatening to cut their lucrative advertising space, and the A . N . P . A . representatives entered several technical objections and asked the manufacturers to secure the 5 per cent not from themselves, but from other consumers whose quotas, it was alleged, had not been reduced during the emergency. This session and another held on the eighteenth adjourned without decisive action to give the manufacturers time to study the figures presented by the Commission. 13 Meantime, on the fifteenth, H . E . Varner, President of the North Carolina Publishers' Association, took the initiative in turning over to Attorney General T . W . Gregory evidence of combination among manufacturers to raise prices. T h e record is not crystal-clear at this point, but it is reasonable to infer that this was a counsel of desperation, as large consumers' dissatisfaction with the 5-per cent scheme left the small publishers in an isolated position. Gregory promptly announced that he had turned the matter over to an assistant. On the twentyfirst this assistant, G . Carroll T o d d , was invited into conference by the Trade Commission "regarding the feasibility of the Department of Justice proceeding prior to the completion of the investigation on the part of the commission." T h e following day the Commission agreed to prepare a statement and brief of its inquiry so far as it pertained to violations of the

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Sherman Act, and have these ready for submission to the Department of Justice not later than January 5, 1 9 1 7 . T h e hearings were resumed on December 29, but terminated abruptly when the manufacturers declined to go further into the Commission's cost figures. Matters had thus moved forward some distance since the April date when the manufacturers confidently requested a thorough investigation of their affairs by the Commission. This had evidently proved more searching than they had anticipated and, together with the pressure of the publishers, even though the latter were not entirely united among themselves, had created a distinctly unpleasant situation. Developments in 1 9 1 7 were to be still less pleasant." This year was characterized by parallel efforts to aid the small publishers, whose plight was the most important element of the situation. The Trade Commission, on suggestion of the publishers, proposed to arbitrate the price question. As has been indicated above, the Department of Justice had evinced an interest, and favored procedure via indictment of the manufacturers under the Sherman Act. This alternative, which would undoubtedly jeopardize the arbitration, might also embroil the large consumers in a tangle with the manufacturers. T h e Department persisted in its course, however, and a federal grand jury prepared evidence resulting in indictments, even while the Trade Commission was working out its arbitration scheme. In light of the indictments the arbitration proposal faced difficult sledding, and the Commission shortly decided to join in the attack on the manufacturers. The United States presently entered the World War, and the Commission in a final report admitted failure to solve the problem and recommended governmental control of the paper industry, including power to fix prices. This was evidently too strong a potion for the large publishers, and a split developed within the A.N.P.A. with the smaller publishers favoring the Trade Commission proposal and the

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larger consumers, safely ensconced behind reasonably good contract arrangements, fearful for freedom of the press under government control of distribution. Presently a scheme was arranged by the large publishers whereby the plight of their smaller brethren was eased somewhat. Paper prices dropped under the double influence of unfavorable publicity and a waiting period characterizing American entry into the war, and the manufacturers found a way out of their uncomfortable predicament. The end of the year found contracts being made on a basis somewhat more favorable to publishers. The problem was not solved, however, as 1918 witnessed a war-born prosperity which again increased demands for paper, made further efforts at regulation necessary, and started another price inflation which rose to unprecedented heights in 1 9 2 0 1921 and was in no small measure responsible for developments of the ensuing decade.15 T h e year opened with the Trade Commission, which had no legal authority to enforce any proposals which it might make, appealing to the Department of Justice for co-operation in securing relief from the papermakers' combination tactics. The manufacturers were warned by a friendly member of the Commission that they were skirting the line of unfair competition, and shortly thereafter a group of them sponsored a meeting in Chicago (January 26) with publishers and members of the Trade Commission, at which unsuccessful efforts were made to compose differences. Manufacturers insisted that increased costs justified higher prices, but failed to produce figures to back their contention. T h e publishers proposed that the Trade Commission arbitrate the opposing claims and establish a fair price for paper, but President Dodge of the International opposed such governmental interference with private business. For the publishers, Glass accused the mill men of seeking to delay action.16 On February 10 it became known that the Department of

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Justice would seek indictment of papermakers on the basis of evidence to be taken by a federal grand jury in session in New York. Mark Hyman and Bainbridge Colby were retained as special assistants to conduct the investigation. Thus warned of their peril, the mill men hastened to Washington for conferences with Francis J . Heney, retained as special counsel by the Commission, and after some negotiation, manufacturers representing one-third the production of the United States and Canada proposed a scheme similar to that brought up at the Chicago meeting. T h e Commissioners, after securing acquiescence of publishers and jobbers, agreed on February 1 5 to accept the arbitration task as of March 1 , 1 9 1 7 . Both large and small publishers apparently acquiesced in this arrangement. An effort was made to secure immunity for the manufacturers who were under fire in New York, but at the insistence of the Justice Department and of some publishers, the inquiry was continued. Again a difference of opinion arose among the publishers3 one group, represented by Glass and the Paper Committee, believing that the velvet glove surpassed the iron hand as a means of solving the immediate problem, opposed further pressing of charges. Other publishers were irked at that part of the scheme which involved giving up 5 per cent of their 1 9 1 6 consumption, but finally agreed when the Commission insisted upon this prior to assuming responsibility for the arbitration.17 Pursuant of this mandate the Trade Commission issued a statement on March 3, its first full-fledged pronouncement since the original resolution of April 24, 1 9 1 6 , a sweeping condemnation of the practices of jobbers and manufacturers during recent months. It characterized as unreasonable the increased prices under 1 9 1 7 contracts, asserting that "There is not now, and has not been, a serious shortage of news-print paper . . . " though the close balance between supply and demand made economy of consumption urgently necessary.

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H i g h e r prices had "been due in part to the fact that free competition has been seriously restricted in the news-print paper industry." Paper was manufactured to within twentyseven thousand tons of consumption, and the difference was taken from reserves, so that, though hard to get, it was always available if buyers would pay enough for it. In view of these circumstances the Commission announced that a price of $50 per ton, f.o.b. mill in carload lots, was sufficient to enable the seven manufacturers who had signed the arbitration agreement, and eleven others who had not, to make adequate profits during the period from March 1 to September 1, 1917. T o secure this price publishers must agree to restrict their use of paper to their necessary minimum, with an additional cut of 5 per cent if this proved necessary to keep the smaller papers supplied. Most of the publishers involved signed the agreement promptly. W h i l e disclaiming any pressure, the Commission believed it to be in the public interest to suspend criminal proceedings then under way against signers of the agreement as long as they observed the terms. 18 T h e plan faced two fatal obstacles: the manufacturers felt that the price proposed was too low, and publishers were slow to agree to the 5 per cent reduction in consumption quotas. It was asserted in the trade that those who negotiated with Heney had been given to understand that the Commission would find that increasing production costs would justify a selling price of close to $60 per ton. Some manufacturers were accused of trying to intimidate their customers by threats of cutting off supplies after September i in case the latter accepted the Commission's scheme. O n the other hand enough publishers did sign to threaten the profits of some manufacturers. A t any rate, the scheme limped along through March, as the United States prepared to enter the war against Germany, a step taken early in April. W i t h this crisis in the offing it appeared that demand might exceed productive capacity.

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Under these circumstances the Trade Commission on April 5 moved more vigorously against the N.P.M.A. by ordering its legal department to prepare a complaint under which proceedings might be taken to improve conditions in the industry. Before this could be completed the New York grand jury handed up indictments (April 12) against seven men identified with the industry, four of whom had signed the arbitration agreement, and whose organizations controlled nearly half of the daily output of newsprint. This of course was fatal to the Commission's plan, and late in May two large manufacturers (G. H . P. Gould and Edward W . Backus) withdrew from the scheme, which presently collapsed.19 T h e Department of Justice, engaged in a number of antitrust litigations, was in no hurry to press the prosecution of the indicted manufacturers. In fact, setting of a trial date in October was taken to mean that two other important cases relating to the Steel and Harvester Trusts would be decided before proceeding with the newsprint matter.20 On June 13 the Trade Commission presented its final report on the newsprint affair, lugubriously reporting that its efforts "to restore competitive conditions in the newsprint industry . . . have failed." It made public for the first time in some detail the methods by which the N.P.M.A. operated on behalf of over 80 per cent of continental production of newsprint. Since price-fixing was not the prime object at the moment, the Association operated through other channels, such as allotment of customers, prorating tonnage of new mills among publishers so as to prevent the new production from operating as a competitive factor, curtailment of production, and prevention of plant expansion. By these devices the market was controlled effectively and each member was left to collect as much as possible from his customers, particularly the small publishers so unfortunate as to be without contract protection. Finally, it set forth proposals for the future, suggesting "That all mills

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producing and all agencies distributing print paper and mechanical and chemical pulp in the United States be operated on Government account} that these products be pooled in the hands of a Government agency and equitably distributed at a price based upon cost of production and distribution plus a fair profit per ton." This was not a proposal to have the Government operate the mills} management and distribution were to remain under existing machinery, but operated under public supervision. Canadian co-operation in the establishment of a similar governmental control was to be sought} failure to secure it would be followed by importation only on Government account.21 This immediately posed the problem of governmental policy and set in motion the wheels of propaganda and of legislation. The Paper Committee of the Publishers' Association expressed wholehearted endorsement of the Commission proposals, characterizing them as "workable, practical and scientific . . ." The New York Times, however, voiced the hope that this dangerous experiment in governmental control over private industry might be avoided. A few days later Senator Owen introduced a resolution authorizing the President "to appoint an agency under the jurisdiction of the Department of Commerce to take over and to operate on Government account for the term of the war . . . all mills producing print paper . . . in the United States . . ." On June 20 Senator Marcus J . Smith of Arizona presented another measure drafted after conference with members of the Trade Commission and more suitable to them than the Owen Resolution. These raised the issue of press censorship and of government interference with business and brought the publishers post haste to Washington. Chairman Glass of the Paper Committee on June 21 pressed for adoption of a resolution sustaining Trade Commission control of paper, a proposition designed, as Trade Commission policy consistently had been, to protect

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the small publishers. T h e majority of those present, mainly large publishers, opposed it. T h e Paper Committee took this as a vote of "no confidence" and threatened to resign; presently, however, it was decided to try to reverse this decision by a referendum among the smaller publishers who had not attended the meeting. By July i o it was reported that the vote was two to one in favor of the Trade Commission's ideas. Prices softened in July and the drive for government regulation slackened correspondingly. Early August saw completion of an arrangement made through Roy Howard of the United Press and the Federal Trade Commission whereby the Paper Committee secured paper and pulp from L o r d Northcliffe's Newfoundland mills for the relief of the smaller publishers. This eased the immediate situation, and by early September it was being predicted that 1918 contract prices would be around $60 per ton, a reduction from the 1917 level. 22 Meantime the Government had experienced difficulties in securing bids for its paper supply and had been forced to order the International Paper Co. to supply newsprint needed for an official publication.23 T h i s was a warning that the problem was still short of a solution, and on September 22, just before Congress adjourned, Smith introduced a more drastic proposal authorizing the Trade Commission to "supervise, control, and regulate . . the production and distribution of paper and pulp. This went beyond the price-fixing applied to wheat, coal, and steel, and called for actual government operation. It was characterized as " a plain and final warning . . ." to the manufacturers, delivered with particular force by virtue of the fact that the resolution was reported to the Senate on October 5, immediately before adjournment but in plenty of time for Smith's vigorous denunciation of the manufacturers to be broadcast during the period when 1918 contracts were to be made. T h e resolution was left hanging like a Damoclean

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sword over the manufacturers and the larger publishers while Congress went home for a short recess.24 The indicted manufacturers were still to be dealt with. Successive postponements removed the trial from its original date of October 8 to November 12 and then to November 26. During the interval it became apparent that backstage efforts were being made to settle the criminal proceedings on some basis which might render the severity of the Smith Resolution unnecessary by trading price reductions for lenient treatment of the delinquents. The pressure of combined events improved the contract situation, and on November 10 the Publishers' Association Bulletin announced contentedly that consumers "are finding little difficulty . . . in protecting themselves for next year under much more reasonable terms than they had anticipated." The Great Northern proposed a contract price of $50, f.o.b. mill, plus increased production costs, which evidently influenced the situation somewhat. Under these circumstances no one was particularly surprised at the announcement on November 26 that agreements had been concluded obviating further trial procedures.25 These provided a compromise whereby the manufacturers escaped by payment of nominal fines, the large publishers received some immediate relief and a guarantee against future ruinous increases, their smaller brethren secured large immediate reductions, and the Trade Commission's control over prices was extended somewhat. T h e court disposed of the indictments by accepting pleas of nolo contendere from all the defendants except Gould, against whom the Government's case was less convincing. By pleading nolo contendere the manufacturers technically withdrew their former pleas of not guilty and agreed not to contest the issue. Practically they admitted that the activities of the N.P.M.A. violated the Sherman Act. Fines totaling eleven thousand dollars, an-

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other practical admission of guilt, were assessed against the individual defendants. T h e y consented to the dissolution of the Association as an u n l a w f u l restraint of trade. A petition in equity enjoined against further violations of the Sherman A c t . T h u s the pressing emergency was disposed of. A n agreement between Attorney General G r e g o r y and the manufacturers, executed on the same date, sought to provide against future trouble. It fixed the price of roll news in car lots, f.o.b. mill, at $60 per ton f r o m January 1 to A p r i l 1, 19185 the sheet news used by small publishers was to sell at $70, with somewhat higher prices in both instances f o r smaller lots. A f t e r A p r i l 1 the Commission was to set maximum prices and to stipulate contract terms, subject to appeal to the j u d g e s of the Second Circuit, whose decision was to be final. T h i s presumably strengthened the position of the T r a d e Commission by g i v i n g it some control over maximum prices, a constitutional development considered important by contemporaries. 28 I t presently appeared that the settlement m i g h t

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troublesome loopholes, and the small publishers were soon reported to be circulating a petition urging passage of the Smith Resolution, f e a r f u l that the manufacturers might not abide by their agreement, as had been the case with the F e b r u a r y 15 arrangement. T h e T r a d e Commission itself appeared to share these fears, as it wrote to Senator F r a n k B . K e l l o g g of Minnesota ( D e c e m b e r 6) and to Smith ( D e c e m b e r 1 3 ) duplicating the publishers' request. I t was stated that a number of producers had not signed the agreement with the A t t o r n e y General, and hence were not amenable to T r a d e Commission price control. Furthermore, the agreement did not include control of paper distribution and of pulp prices and distribution. U n d e r these circumstances, the Commission felt, the Smith Resolution w o u l d act as a useful club in case severe shortages made its regulatory task a difficult one. 27 T h e year 1918 was marked by two main developments,

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against a background of minor price shifts.28 In January an unsuccessful effort was made to implement Trade Commission control of the paper business by enacting the Smith Resolution as a safeguard to the smaller publishers. Most of the year was marked by a contest of maneuver between makers and consumers, each trying to use the machinery of the November 26, 1917, agreement to its own advantage. This contest demonstrated quite thoroughly the weakness of the machinery and the ineffectiveness of the Trade Commission without controls stronger than those provided. It will be recalled that the Smith Resolution, still before Congress for action, called for government operation, under the Trade Commission, of the manufacture and distribution of pulp and paper at a fair margin of profit to be determined by that body. Producers dissatisfied with prices so fixed might accept 75 per cent of the established price and sue in the United States District Courts for such further sums as they deemed justifiable. 29 It represented the Trade Commission's conception of desirable regulatory machinery and had received the support of small publishers. It was bitterly debated on four legislative days in January and defeated despite desperate efforts of its sponsor to salvage some part of its effectiveness by accepting amendments designed to placate its opponents. In opening the debate (January 8) Smith proposed amendments conforming the resolution to other wartime legislation and making government operation of the industry dependent upon Presidential discretion rather than automatic. H e read into the record a letter from Trade Commissioner William B. Colver stating that the Smith scheme "embodies essentially the recommendations made in our final report." Much recent history was rehearsed in the early discussion and Smoot, a Republican, criticized the scheme on the ground that it conferred too much power upon the President, a Democrat. This opposition to centralization was not con-

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fined to one side of the Senate, for Thomas W . Hardwick of Georgia joined in objecting to government entry into business, particularly condemning the danger of establishing what might amount to political control over the press. This danger to freedom of the press was hammered home vigorously and the ugly word "socialism," always calculated to arouse a flutter of fear, was injected into the debate. Smoot returned to the charge and openly claimed that the Smith Resolution was advocated by publishers because they thought that under its operation they could obtain paper more cheaply than under the agreement proposal. T h e debate presently became the vehicle of an attack upon the Administration, and nothing new was added to the points already made. Smith's amendment giving the President power to initiate government operation was defeated and after some further discussion the resolution itself followed into limbo. A similar resolution was presented to the House, where it was hoped the atmosphere might be more favorable, but nothing came of it. T h e debate and contemporary comment made it abundantly clear that the Smith Resolution movement was in the interest of the small publishers and also that the large press was indifferent or actively opposed, ostensibly on the ground of censorship, practically on the ground of governmental interference with private business—an interference which they were quite willing to condone in the case of the manufacturers. T h e conflict between publishers and manufacturers was continued through 1918 within the framework set up in November, 1917. It shows the Publishers' Association, with no discoverable division between large and small members, working unitedly to keep prices down but failing to do so because of rulings of both the Federal Trade Commission and the courts. Since these developments have but little to do with the main thread of the present story, a mere outline must suffice. T h e Trade Commission hearings, called to establish the price

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as of April i , 1918, opened in February and dragged on into June, partly through failure of manufacturers to present their cost figures promptly. These figures, it was argued when they were finally presented, necessitated a selling price of at least $80 per ton if operations were to be profitable. O n the other hand, the publishers presented arguments to show that $50 w^s the outside limit of proper price. On June 18 the Trade Commission set a price of $62. T h e disappointed manufacturers appealed to the courts, as the agreement specified they might, and on September 28 the judges set the price at $70. T h e manufacturers had meantime applied to the Trade Commission for an adjustment on the April 1 price to allow for increased costs of labor, freight, and wood, and October 19 the first two of these were added to the $70 price, bringing the total to $75; the wood allowance was not granted. T h e many ramifications of these proceedings indicate that publishers were alert to protect their interests; they also show the cumbersomeness of the machinery provided for settlement of the price problem during the war. T h e end of the war emergency late in 1918 reduced the pressing importance of these problems and left the way open for the development of others. Perhaps the real significance of the events of 1917 was the restoration of a competitive market, against which the detailed story of price maneuvering tends to sink into relative insignificance.80 T h e year 1919 marks the opening of the postwar era the manifestations of which became more apparent in 1920 and the results of which carried over into the 1930's. Wartime controls on the use of paper (not discussed in the present study) were removed. T h e publishers failed in their efforts to lower the $75 price set in 1918, and contracts for 1919, covering the major part of newsprint consumption, were let at approximately that figure. T h e lapsing of effective Trade Commission power to influence prices left the market subject to

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the normal influence of supply and demand. Here the 1 9 1 6 1917 situation repeated itself with variations: unprecedented demand put an unexpected strain upon a hitherto unequalled supply, and shortages, real or fancied, created a panic market in 1920, the seeds of which were sown in 1919. H i g h prices again begat pressures in various directions. A t home occurred the usual investigations, designed to uncover any possible irregularities, and once more efforts were made to induce removal of restrictions on the export of Crown-land pulpwood. T w o periods of extremely high prices in four years produced their inevitable result in stimulating entry of new capital into the paper business, causing an unhealthy expansion in the Canadian industry. Thus the period 1919 to 1920 marks a transition between the aftermath of war and a mushrooming production creating long-standing problems in its own right. It should first be noted that whatever troubles developed were not the result of reduced supplies. T h e total continental production increased every year from 1913 through 1920 with the exception of 1918. T h e mills produced in 1919 thirtytwo per cent more paper than in 1913, and in 1920 forty-five per cent more. 31 There was nearly two months' supply at the beginning of 1919, according to current consumption, either on hand or in transit—an ample margin. T h e spot market was sufficiently below the contract level so that paper was being exported at $66 per ton for want of domestic purchasers. Under these easy circumstances there developed a boom which carried the spot market to $140 in November and set the stage for 1920 contract prices on a level considerably above that of 1919. T h e causes of this phenomenon were outside the control of either publishers or manufacturers of newsprint, but the boom affected both profoundly. Increasing business activity and the success of wartime advertising campaigns operated by the R e d Cross and Liberty Loans were reflected in larger advertising budgets; these in turn brought revenue

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to the publishers but demanded ever-larger supplies of paper; to insure these, manufacturers were put under pressure to increase the output of their already overstrained mills.32 These, though producing at full speed, were unable to keep up with the demand, and by early August it was reported that they had only four days' stock on hand. If the foregoing analysis is correct it should indicate that publishers' lack of foresight in allowing cheap paper to be exported was partly to blame for what occurred, though a crisis would probably have developed had all exports been retained. Be that as it may, consumption presently outstripped production, and by July the spot price exceeded the contract average. This found the publishers, as in 1916, bidding against each other in the spot market and driving the price to new heights. Even yet, however, the manufacturers did not anticipate the developments of 1920, and most contracts were let at less than $90 per ton.83 Such price increases inevitably stimulated discussion, and several Congressional proposals called for investigations. T h e evidence available connects the publishers only indirectly with the initiation of any of these proposals, though all were in line with their oft-expressed policies. In August Senator James E . Watson of Indiana proposed to have the Department of Agriculture investigate the pulpwood resources of the country, including Alaska, and recommend measures of conservation and utilization. Senator James A . Reed's (Missouri) Resolution of August 20, adopted with little debate, was more pointed in its application: "Resolved: That the Committee on Manufactures or any subcommittee thereof is hereby authorized and directed to investigate the newsprint paper industry and to ascertain whether it is now or has been engaged in discriminatory, unjust, or illegal practice, and whether the prices now being charged for newsprint paper, or similar products, are excessive and the causes for existing

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prices . . ." Edwin D . Ricketts of Ohio introduced the most elaborate proposal (December 3) calling for a select committee to investigate, among other matters, the question of monopoly control.34 None of these was acted upon, and 1919 passed into 1920 under a quickening demand which boded ill for the future. Conditions approached panic in the spring and summer, and prices rose steadily throughout the year. Contracts were let at $90 for the first quarter, $100 for the second, $115 for the third, and $130 for the fourth, the last figure carrying over into the first quarter of 1921. By mid-April spot prices ranged up to $300. Again the small press, unprotected by contracts, was the principal sufferer, and the large publishers could afford to be relatively complacent, though still heavily burdened. Again the situation was complicated by large purchasers competing with small purchasers in the spot market and hoarding their purchases. Harried buyers complained of a shortage of newsprint amounting to famine, though careful observers pointed out shortly after mid-year that there was enough to go around if properly distributed. Small publishers, however, were too busy making desperate moves to stave off imminent ruin to listen to any reassurances. Their larger brethren too, while not in such dire straits, faced the future with misgivings. 35 Proposed remedies were numerous, but none was immediately effective. T h e Publishers' Association's principal theme was economy in the use of newsprint. This was urged first through a special Committee on Print Paper Conservation, which failed to accomplish the desired results. T h e Directors and the Paper Committee in March asked all publishers to cut consumption 10 per cent and to request all advertisers to reduce their space by the same figure. T h e Annual Convention urged the membership to stay within its 1919 consumption figures, and many followed this suggestion. This action

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was credited by the Paper Committee with reducing the spot price from $320 to $220 within a short time.86 T h e Association also took steps to procure European newsprint, previously imported in negligible amounts, and, acting on the presumption that a hundred thousand tons of imports would break the spot market, had by September secured quotations of $ 150 per ton, c.i.f. New York} it was estimated that contracts for 1921 delivery exceeded the hundred-thousand-ton mark. T h e Publishers' Buying Corporation, representing over two hundred smaller papers, took the same trail across the sea, and 582 tons entered from Europe on August 16. Finally, several large consumers of newsprint such as the Hearst papers in New Y o r k and Chicago, the Hartford Courant, and the Baltimore American, found themselves in short supply and pursued a similar course.37 In April the Newsprint Service Bureau held a meeting of manufacturers at which two of these, International and George H . Mead Co., agreed to ask their customers to release from 1 to 2 per cent of their contract tonnage during April, M a y , and June for relief of those dependent upon the spot market. Presently a group of the smaller publishers organized the Publishers' Buying Corporation as a co-operative purchasing agency. This was based on the theory that there was no paper famine and that the problem was one of careful distribution of a supply which would be adequate if properly managed. 38 A s often happens in time of stress, attempts were made to use the machinery of government to redress economic imbalance. O f a score or so of proposals introduced in Congress, three reached the point of discussion on the floor of one or both Houses. None produced affirmative results, but from the composite discussion the outlines of a picture began to emerge. This showed the small publishers, fearful for their lives, grasping at the traditional methods of prosecution of the manufacturers and threats toward Canada. It showed the

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larger publishers less bitterly antagonistic toward the mill men than in 1917, and both manufacturers and large publishers more fearful of oppressive government regulation than of each other. Brief mention may be made of a resolution passed by the House on March 15 calling on the Secretary of Commerce for such information as he could furnish relative to shortage in the supply of newsprint, whether contract or other devices had given advantage to one class of newspaper over another, "and such information as he may have in regard to the issuance of any regulations governing the distribution and consumption of said print paper." T h e debate indicated Congressional belief in a real shortage of paper, but elicited no information on the queries addressed to the Secretary, as he replied that he had no data and had received no authority to issue any regulations governing distribution of newsprint.39 April, M a y , and June witnessed discussions of two more important proposals. T h e Reed Resolution of August 20, 1919, directing an inquiry under the Committee on Manufactures into possible "discriminatory, unjust, or illegal practice . . ." on the part of the newsprint industry had been left in abeyance during the fight over the Versailles Treaty. Hearings opened on April 28 before a subcommittee of which Reed himself was head. Glass represented the Publishers' Association. H e reported that Senator Robert M . LaFollette of Wisconsin had been in touch with the Association the previous autumn requesting co-operation in preparing a case. T h e matter had been submitted to the Board of Directors, which had "indicated an unwillingness to take any official part in the procedure." T h e reasons given were first, that the Association was still in debt on expenses incurred during the Trade Commission investigation} second, "a growing skepticism as to the efficiency of the Government in curing the cause which was regarded as fundamentally economic . . . I am very doubtful whether the Government could do very much to re-

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lieve the situation that exists throughout the whole world . . ." A representative of the New York Times doubted the efficacy of governmental action, asserting that the remedy for present ills lay rather in decreased consumption and increased production. Paul Patterson, representing the Baltimore Sun, declared that the manufacturers were in part discouraged from making the plant expansions which might have cared for the existing emergency by fear of governmental regulation of the market to their detriment, as well as by the possibility of prosecutions such as that of 1917. The publishers, he asserted, should share the blame because of their bullying attitude toward the manufacturers at that time: " I think it is pretty well recognized that it was a mistake at that time to have ridden the manufacturers so hard . . . " a mistake which publishers should not be led into repeating.40 Frank Munsey advocated government regulation of the sources of both paper and pulp. His testimony was countered by a letter from William Randolph Hearst asserting that the day of government regulation of the paper business was past. Thus the attitude of the larger papers was mainly on the side of laissez faire in the interests of better publisher-manufacturer relations. On the other hand, the spokesmen of the smaller publications continued, as in 1917, to blame the mills and the jobbers for their troubles. Courtland Smith, representative of the American Press Association, asserted on May 7 that half the country papers would fail unless immediate relief was afforded them, and charged the manufacturers with conspiring "to regulate production so that prices might continue to mount." This idea of combination among the mills was repeated by other small-publisher representatives to the point where it may be taken as representative of their attitude. Chester W . Lyman seconded the large publishers' dislike of government action to lower the spot market price, blamed federal interference for the existing shortages, and joined

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Arthur Hastings, another paper man, in recommending decreased consumption as a remedy. T h e hearings closed on a minatory note with Chairman Reed announcing his unwillingness to see a few large papers wax fat while their smaller brethren went out of business.41 T h e subcommittee report was rendered on June 5, 1920, a few minutes before Congress adjourned. It came in over the name of David I. Walsh of Massachusetts, Reed withholding his signature. It asserted the belief that manufacturers had persisted in the practices outlawed in the 1917 agreement by acting in collusion to charge "excessive, unreasonable, and wholly unfair prices" on the basis of "practically identical" contracts. It condemned a loophole clause in the 1917 agreement through which, by mutual agreement, a price might be charged higher than the maximum fixed by the Trade Commission. This joker, it was insisted, had rendered all the other provisions of the agreement nugatory. T o remedy these evils it recommended immediate prosecution of manufacturers guilty of violating the anti-trust laws or the agreement of 1917, a tax on excessively large Sunday editions, amendment of the Lever Food Control Act to include newsprint, and "if the Government's efforts to fix and maintain a reasonable price appear to be futile because of a virtual monopoly in the print-paper industry or because of continued protests from the manufacturers that the supply is running dangerously low, we recommend that the Government by law establish a newspaper print board to supervise the manufacture and distribution of newsprint paper; and to enter into a co-operative organization with the country newspapers which would eliminate the jobber or middleman and enable the country press to buy newsprint at the lowest mill rate." It closed on a note criticizing the Senate for adjournment without taking action on this and other pressing matters. It thus

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reflected essentially the point of view which had produced the developments of 191 j . i 2 Whereas the Reed Resolution proposed to solve the problem of supply by attacking domestic monopoly, the Underwood Resolution offered an international approach to the same question by providing increased amounts of wood for American mills through removal of provincial export restrictions. This was of course aimed at the immediate emergency; it may well be viewed, moreover, as the last tentative move toward creating a situation where the domestic industry could expand. W i t h its failure there was left no alternative to the increasing removal of the manufacture of paper, as well as pulp, north of the Canadian border. T o clarify this generalization, a brief review of the Canadian situation may be in order. It will be remembered (cf. pp. 29, 64) that the forest Provinces had forbidden the exportation of unmanufactured wood cut on the Crown lands. This had, under American legislation, subjected them to retaliatory levies on Canadian paper made from Crown-land wood and exported to the States. T o circumvent this the export restrictions had been removed from Crown lands held by Canadian companies, with the tacit understanding that no wood should be exported. Thus Canadian-made paper from Crown-land wood could enter the United States without penalty. This satisfied everyone except the American holders of Crown-land limits who had no mills in Canada, and thus found their extensive holdings immobilized by Canadian ingenuity. T h e unfortunate aspects of this situation soon presented themselves to American interests, and as early as April, 1919, reports emanated from Canada of renewed agitation for removal of provincial export restrictions.48 Shortly thereafter "important news print producing companies" issued a pamphlet, "International Fair P l a y , " urging that American hold-

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ings of Quebec Crown-land wood be freed for export. This, it was argued, "would afford an indefinite supply of raw material at moderate cost to our paper mills, would reduce and hold stable the selling price of news print and would insure the permanent price-regulating competition of our mills with the Canadian mills which are not subject to our laws or regulations . . Consumer support was solicited, and it was argued that publishers' influence, "unitedly and energetically exercised, will be sufficient to move Congress to negotiate with Canada, and particularly the Provincial Government of Quebec, the restoration of the property rights in the pulp wood on the Crown land limits acquired by United States interests prior to 1910 . . . " Another paragraph carried a potential threat to restrict Canadian access to the American coal and sulphur needed by Dominion manufacturers.44 As a measure of relief Senator Oscar Underwood of Alabama introduced a resolution (February 2, 1920), calling for presidential appointment of a five-man commission to negotiate with Dominion or provincial governments for cancellation of restrictions on the exportation of pulpwood and newsprint. Though the evidence available gives no indication of pressure from the publishers, Underwood was soon quoted as thinking that all publishers should back the resolution. W h e n it came up for debate on February 25, its language had been toned down in deference to Canadian feelings, but Section 2 contained what its sponsor denominated "a big stick" to deal with possible Canadian recalcitrance. This provided that in case of inability to secure the removal of restrictions, the commission "shall investigate, consider, and report to the Congress what action should be taken by the Congress that will aid in securing the cancellation of said restrictive orders in council . . . " This to Underwood implied retaliatory embargoes in case of failure. In urging passage of the resolution

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he maintained that its introduction was "in response to an almost unanimous request of the newspapers of the United States . . because of their desire to have newsprint included (this in spite of the fact that at the time there were no restrictions on the exportation of newsprint); the real point at issue, he admitted, was pulpwood. T h e technique of appointing a presidential commission was adopted in order to establish direct contact with Canada, thus short-circuiting the State Department, which had to deal with Canada through the Court of St. James, and which had hitherto demonstrated its inability to do anything more than "throw rocks." It was the only possible method, he insisted just prior to passage of the resolution on February 27, to provide sufficient newsprint to save the small newspapers, in addition to its efficacy in saving the domestic newsprint industry.45 The Resolution slumbered in the House Committee on Foreign Affairs for some time, lacking pressure from either publishers or manufacturers, but hearings were finally scheduled for April 26. Underwood appeared in support of his resolution. H e complained of the ineffectiveness of the Department of State in dealing with the matter in hand, and charged the Department with obstructing the resolution. H e suggested as an explanation that some newspapers having contracts with Canadian mills had persuaded the Department to this point of view. H e was followed by W . E . Haskell, Vice President of the International, who asserted that the resolution was "the only measure yet presented to Congress which contains assurance of a sufficient quantity of pulp wood to perpetuate the present production of our paper mills, to justify the installation of new machines, and to save the great pulp and paper industry of the United States." H e generously pointed out that it also provided "the only practical means of providing sufficient production of newsprint in the United States to secure the lives of the smaller newspapers." H e was

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seconded by H . C. Hotaling, representing the National Editorial Association, made up of five thousand small newspapers, and by other manufacturers and spokesmen for smaller publishers. T h e A . N . P . A . , however, was absent. In fact, at almost the same time its Paper Committee was presenting to the Annual Convention a resolution opposing congressional interference with the newsprint situation.46 T h e House passed the measure on June 3, amending it to have the commission report to the President instead of to Congress, and President Woodrow Wilson pocket-vetoed it, in all probability because of strongly hostile representations made by the Dominion Department of External Affairs. T h e Canadian authorities considered it as an attempt to dictate the manner of regulating the Crown lands, and as such, a derogation of Canadian sovereignty. T h e very appointment of the commission would be "regrettable." As for Section 2, its language was found to be "unusual in public measures relating to dealings with a friendly country} but the suggestion of a threat which it is impossible to avoid, would in the circumstances of the present case be quite out of place and would offer a serious affront without cause." " This episode, and particularly its overtones, make it reasonably apparent that though the hand may have been that of Esau (the small publishers), the real voice of Jacob, speaking through both Underwood and his resolution, was that of the American manufacturer, anxious to release his supplies of restricted wood. Together with the Reed Resolution debates, the events of 1920 indicate clearly enough that the small publishers were willing to grasp at any means, domestic or international, to secure relief and that the large press was mitigating its hostile attitude toward the manufacturers, and had joined the latter in objecting to governmental action as a means of improving conditions. It was the small publishers who made it possible

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to keep alive the pressure for government regulation of the industry. 48 T h e newsprint market reflected somewhat tardily the recession of 1921. From the first-quarter peak of $130 per ton, f.o.b. mill, four successive reductions drove the price down to $70 for the first quarter of 1922, where it held steady for a year. T h e January, 1923, level of $75 held until July, 1924, when prices began a long toboggan slide which lasted the rest of the decade. T h e drop of 1921 reflected not only the general recession, but also expansion of production beyond the normal capacity to consume, and moved so rapidly that by April spot prices were below the contract level. 49 T h e drop in price relieved the pressure on consumers, and little was heard of government investigations. T h e Fordney-McCumber Tariif legislation of 1921-1922 evoked the last-gasp efforts of the manufacturers to secure protection of newsprint against European competition, but Canadian-American financial relations in the industry were too closely intertwined by this time to warrant proposing protection on the continental product, and the only important immediate development was a new definition of "standard newsprint" in terms of the use to which it was to be put, rather than the valuation per pound. By this definition standard newsprint "is the commercial name for paper used in printing newspapers . . T h e Underwood Resolution was repassed by both Houses with minor modifications, little debate, and retention of the obnoxious Section 2. In November the British Ambassador reported that the Canadian views of M a y 27, 1920, were still adhered to 5 that the Government would not consent to a foreign mission dealing with the Provinces} and that, while the commission method of dealing with the Dominion Government was considered "inappropriate," a direct communication from the Government of the United States would receive

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the usual "most careful consideration." President Warren G . Harding passed the matter off in December by announcing that no commission would be appointed for general discussions, since the Dominion Government had expressed its willingness to consider individual cases of alleged discrimination as these came up. Quebec had meantime acquired a new Premier, M r . L . A. Taschereau, who stoutly affirmed that as long as his tenure lasted, so long should the embargo endure —a reflection of Canadian interest in conservation which had been growing rapidly with the new decade. And in 1923 this was reflected further by passage of a Parliamentary resolution authorizing the Dominion Government to prohibit at any time the exportation of any or all kinds of pulpwood.50 T h e period just discussed has involved essentially the attitude of our principal reagents—publishers and manufacturers —to two crises. The most significant phase has been the appearance of a divergent point of view between the large and the small publishers, with consequent results on the policy of the Publishers' Association. During the first crisis of 1 9 1 6 1 9 1 7 the large publishers were first complacent toward the manufacturers and then opposed to too drastic prosecution because of fear of governmental interference with private enterprise Paper Committee and Association policy, as far as it can be determined, reflected the pressure of the small publishers for action against monopoly. During the second crisis Association policy reflected large consumers' fears of government controls not dissimilar to those of the manufacturers themselves} the small f r y were left to fight their own battle.

CHAPTER

VII

Overproduction and D e pression, 1 9 2 2 - 1 9 2 9

T

story now enters a period of expanding production, particularly in Canada, brought about by a number of factors. T h e enormous prices of 1916— 1917 and 1919-1920, coupled with the ever-increasing appetite of the American public for news, attracted investment capital to the Canadian industry. This movement was stimulated by provincial authorities in Quebec and Ontario, anxious to exploit domestic resources of wood and water power and rivals in Dominion industrial development. Hovering on the fringes were the stock promoters so characteristic of the 1920's, not unwilling to inject a modicum of their peculiar brand of "water" into a situation ripe for speculative development. Under these stimuli Canadian output increased from eight hundred thousand tons in 1920 to four million tons in 1930, while the American production, although increasing up to 1926, failed to keep pace.1 Supply soon exceeded demand, with consequent falling prices which pleased the publishers and for some years minimized their activities. Promoters and politicians at first discounted the growing discrepancy between supply and demand, and money continued to pour into the industry. By 1927 Canadian producers were looking to consolidation as a remedy for overproduction and dropping prices. This was unsuccessful, and in 1928 a deal between Hearst and the Canadian International Paper Co. destroyed HE NEWSPRINT

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what was left of the price structure, threw the industry into a slump, and brought the Premiers of Quebec and Ontario to an effort at stabilization through political pressure. Stabilization meant not only controlled production but a higher price level, and forced the publishers to canvass the question of wherein lay their own best interests. T h u s by the time the United States entered its time of trial in 1929, the paper industry had for months been struggling with a private problem wherein the larger depression only compounded confusion. Economic recovery in 1922 speeded consumption to a point where it momentarily outpaced production, the new Canadian increment not being able to keep up with the demand. 2 This resulted in a full-dress economy campaign by the Publishers' Association, including formation of a national News-Print Conservation Committee with subcommittees in each State, with the object of reducing consumption by 10 per cent in the hope of influencing the autumn contract price. T h e move succeeded only in moderating the increase, as $7 5 was fixed as the figure for the first half of 1923. This was the last increase for many years; in fact, there followed a procession of reductions which carried the price to $65 prior to the debacle of 1928. Between 1922 and 1929 the decline amounted to 16 per cent, while consumption mounted from two million tons ( 1 9 2 1 ) to three million, eight hundred thousand tons; the general commodity price level meantime remained relatively stationary.8 Against this background of falling prices was enacted a series of events which brought Canadian-American paper relations to the fore. T h e threat to Canada contained in Section 2 of the Underwood Resolution has already been mentioned. Congress presently reversed the Wilson tariff policies in the Emergency Tariff Act of 1921 and the companion FordneyMcCumber Act of 1922. These contained two added threats, one actual and one potential. M a n y agricultural commodities, prominent among Canadian exports and free-listed by the

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Democrats, were again subjected to duties. Again, the socalled flexible provisions permitted the President, acting on information furnished by the Tariff Commission, to alter rates to a maximum of 50 per cent to equalize American production costs with those in competing areas. W h i l e these irritations were arising, Canada was following an evolution through which the United States had previously passed in the conservation of her natural resources, including her forests. Earlier optimistic estimates of pulpwood reserves were being revised downward following investigation and, as the Department of External Affairs had put it in 1920, "the more the position is analysed by experts the less encouraging it becomes." Finally, Canadian financial interests were again, as earlier in the century, alert to investment possibilities in the paper industry. In a previous era provincial restrictions had aided in the northward movement of the pulp industry. Could not further restrictions complete this movement and eventually do as much for paper manufacture? A n y attempt to assess relative importance among these factors savors of the ancient hen-or-egg dilemma; the net result was obvious: a movement for complete prohibition of the export of unmanufactured wood from both fee and Crown lands at the hands of either Dominion or provincial authorities. This was in vigorous life in 1922 and flowered into action in 1923. 4 T h e spearhead of this drive was one Frank J. D . Barnjum, a large timber owner, variously described as an ardent conservationist and as a front for Canadian manufacturing interests. Whatever his motivation, his methods were spectacular. Early in 1923, for example, he offered two thousand dollars in prizes for the essays arguing most convincingly in favor of an export embargo. His techniques struck a popular chord, and pressure was applied to the Government. This created an embarrassing political situation, since pioneer settlers in Quebec and Northern Ontario made their first "crop"

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by cutting pulpwood; the income thus derived maintained them until their land was brought under cultivation. An embargo would destroy the competition between American and Canadian buyers which maintained the price at a satisfactory level. Furthermore, though it might be good in the long run, the fact remained that in the immediate event of an embargo Canadian facilities were insufficient to absorb the cut. Caution was therefore desirable, and when a measure was finally adopted (June 20, 1923), it merely provided that the Government might in its discretion make prohibitory regulations. This was hedged by Prime Minister W . L . Mackenzie King in an oral statement that pulpwood grown by farmers on their own land would be exempt from any future restrictions, and by a secret Order in Council excepting from such regulations all wood exported under contracts dated earlier than June 1, 1923. Furthermore, a Royal Commission of investigation was appointed, with the promise that no action would be taken prior to its report.5 This proposal constituted a threat to American owners of timber limits held in fee and to American mills dependent upon Canadian pulpwood. The manufacturers promptly met in New York and organized a Committee for the Perpetuation of the Paper Industry in the United States, headed by Henry W . Stokes, President of the American Paper and Pulp Association. This group interrogated Charles E. Hughes, Secretary of State, and was assured that the Department was on watch and that the Dominion Government would investigate before taking action. The American Consul General at Ottawa was advised of the seriousness with which the Department regarded the question and the adverse effect of an embargo upon the organs of public opinion in the States as well as upon good relations between the two governments. H e was permitted to indicate that the United States would not submit to an embargo "without retaliation of a far-reaching

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character." Hughes told the British representative in Washington that "the Canadian Government must realize that in this matter if they proceeded along the lines suggested that [sic] they would be taking the American newspapers and our publishers by the throat, and that one could hardly imagine a case in which there would be a more serious and immediate reaction on the part of the American public." 6 The hearings of the Royal Commission lasted for five months, and, together with other discussions, brought out divergent Canadian viewpoints. T h e argument for conservation which had served as the fuse to touch off the question received less stress as time went on, being more or less relegated to the background in favor of the profit motive. As this emerged, its inconsistency with conservationism was pointed out; forcing American capital to build paper and pulp mills in the Dominion would hardly husband domestic resources. Furthermore, the forest Provinces, particularly Quebec, were sensitive on the point of local autonomy, and Taschereau made several pronouncements that the matter should be left in provincial hands. Back of this was undoubtedly the hostility of small landowners and of the settlers who made the initial pulpwood harvest on their new holdings. Finally, as the discussion continued through 1924, 1925, and into 1926, it seemed difficult for the paper interests to reach unanimity as to policy. The result was that the Government hesitated to take a step which would expose it to domestic complications and inevitable difficulties with the United States.7 T h e Royal Commission filed its report in July, 1924. It left the question of an embargo to the discretion of the Government, without making any formal recommendation, the burden of its argument being directed to conservation, with some attention to an export tax as a possible alternative to the embargo. Agitation was revived early in 1925 with this alternative to the fore as a possible means of securing some action

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while avoiding the multiple antagonisms promised by an embargo. Again in 1926 the Canadian Pulp and Paper Association demanded an embargo, but by this time a tremendous expansion had taken hold of the Dominion newsprint industry and embargo, export tax and other considerations faded into the rosy dawn of a great boom. Only an occasional Cassandra was found as yet to decry the dangers of overproduction which came in its train.8 This expansion, to which the embargo agitation no doubt contributed by stimulating the already rapid movement of American capital into the Canadian industry, was accelerated still further by developments of 1 9 2 4 - 1 9 2 5 which deserve more detailed attention than the limits of this study can give them. It was during these years that the great International Paper Company definitely turned its face toward the forests and water power of Canada as the prime base of its enormous operations. The move was preceded by the retirement in June, 1924, of President Philip T . Dodge, who had guided the company for ten years, and the choice of his successor, A. R . Graustein, member of a Boston law firm, a financier rather than a paper man, though recently concerned with the management of Canadian paper mills. T h e Dodge regime had launched the International in the Canadian paper-making field through a mill at Three Rivers, Quebec. Shortly after Graustein's accession rumors sprang up that the International was about to acquire the Riordon Paper Co., in whose reorganization he had recently been involved, as the beginning of a shift of its operations to Canada. This was denied at the time, but early in 1925 the rumors took form through acquisition by the International Paper Company of Canada, Ltd., of mills, water power, and timber, adding the Riordon and Gatineau properties to its original holdings. The deal was said to involve an outlay of twenty-seven million dollars for ninety-five hundred square miles of territory, an area equal

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to that of Massachusetts, Connecticut, and Rhode Island combined, which would within a few years enable the company to produce a thousand tons of paper per day. Graustein was quoted as modestly asserting that the transaction "means nothing less than the transfer of a large part of the American newsprint industry to Canada." 9 T h e International's move furnished at once an answer to the embargo question and a further impetus to the feverish activity characterizing the Dominion newsprint business. New capital was reported to have entered the industry at the rate of three and one-half million dollars a month in 1924, and the trade journals resounded in 1925 with accounts of new enterprises about to be launched, of mergers and consolidations among established firms, and of the tremendous growth of hydroelectric power which was a natural concomitant as well as a fine field for the speculatively inclined. By this time, too, the Cassandras were beginning to appear in numbers. Warnings of prospective overproduction began to be heard early in 1925 when it was learned that Canadian mills had not been running full in 1924 and that capacity exceeded current demand. The same year, 1925, Dominion production exceeded that in the States during seven of the twelve months, and was only eight thousand tons behind on the year's total. Well might Taschereau, who had told a group of touring American industrialists in June, 1924, that Quebec had some American capital but would like more, warn the Canadian Pulp and Paper Association on January 29, 1926: " I believe we are very close to over-production . . . I believe that new firms should not be encouraged too much, and established firms, which have built up this Province should be protected to the fullest extent." The piper was about to collect his fee. 10 During 1926 the International became the bellwether of continued plant expansion, proposing expenditures of thirty million dollars in Quebec and twenty-five million dollars in

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N e w Brunswick during 1926-1928 in the related paper and public utility fields. Nearly a thousand daily tons of new Canadian production were readied for the market in 1925, and by M a y , 1926, predictions were that over eighteen hundred more would come in during the current year. T h e figures when compiled showed an increased continental production of 24 per cent over 1925, with Canada outstripping the United States for the first time by one hundred ninety-five thousand tons. Fears that the market might not absorb this great amount were temporarily allayed by the failure of the usual summer slump in consumption to materialize, and in August the mills were reported running at 99 per cent of capacity. T h e turn of the year, however, brought renewed warnings from financial quarters of the dangers inherent in the situation. T w o particularly dangerous portents also appeared. For one, a small but noisy minority in the Quebec legislature attacked the firmly entrenched Liberal Government for bartering provincial resources to American capitalists for an inadequate return. For another, the Publishers' Association, reporting overproduction in the spring of 1927, announced that spot market sales were well below the contract price of $65, in effect since January 1, 1926, and that "it is generally reported that much of the product, through freight or other adjustments, has sold at a mill price of less than $65 per ton." This cautious suggestion that the price structure was not entirely intact indicated that the piper was coming still closer. 11 H e knocked and demanded payment in 1927, but was put off until 1928. Overproduction and price cutting were admitted facts in this year. In March it was estimated that, by August, mill capacity would exceed demand by fifteen hundred tons daily, and earlier predictions had called for twelve hundred tons of new production daily by the end of the year. Both Ontario and Quebec authorities let it be known that new mills would be discouraged as dangerous to production

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already in the market or under construction. A n d by mid-May the Eastern mills were running at 80 to 85 per cent capacity. Under these circumstances protective measures were in order. 12 These took two forms: continuation of the mergers which had characterized the industry since 1925 and which looked to greater facility in controlling output and price, and adjustment of sales machinery to the same end. This is not the place to set the process of consolidation in its proper persepctive in the hectic pyramiding of securities which marked the later 'twenties} suffice it to say that by the end of the year three major groups had been created: the Abitibi Power and Paper Company, Ltd., with 1,814 t o n s ' capacity per day, the International with 1,694 tons, and the St. Maurice Valley Company with 909 tons. A few independents, such as Price Brothers, Laurentide, Wayagamack, Brompton, and St. Regis supposedly were unattached. T h e sales reorganization occurred in M a y , 1927, with the formation of the Canadian Newsprint Company to co-ordinate the functions of the St. Maurice Valley Sales Corporation, Ltd., the George H . Mead Company, Ltd., and the Canadian Export Paper Company, L t d . It was in turn closely affiliated with the Canadian Paper Sales Company, Ltd., William N . Hurlbut serving as President of both concerns until March, 1928. T h e Canadian Newsprint Co. bought paper from the mills and through its subsidiaries sold it to the consumers. T h e latter thus lost direct contact with the manufacturers. T h e scheme made it possible for the Canadian Newsprint Co. to control production, prorate orders among the mills on the basis of rated capacity, allocate sales, and, it was hoped, determine prices to the advantage of its constituents. In an effort to keep its mills at maximum operation the Canadian Newsprint Co. negotiated in the summer a tentative contract with the Newspaper & Magazine Paper Corporation, purchasing agent for the Hearst newspaper empire. This called for annual purchase, over a ten-year period, of two

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hundred fifty thousand tons of newsprint at a figure considerably below the $65 level of contract prices. Deliveries were to begin with 1928. It was seemingly the ramifications of this arrangement which set in motion the events of that year to which attention must now turn. 13 This year the piper collected his fee for the dance of overproduction to which he had piped his tune through the 'twenties. Hearst and the International Paper Co. emerge as joint antagonists in the opening of a price war which was to result in disaster to the Canadian mills, to produce political efforts at price stabilization, and in turn to arouse the A . N . P . A . from its comfortable satisfaction with lowering prices. This was waged against a background of continued overproduction, with 1928 capacity rated up to 25 per cent above any possible consumption. T h e year also witnessed an innovation in sales practice, a reflection of unsettled market conditions. Since 1917 sales had been f.o.b. mill} beginning with 1928 the manufacturers absorbed a percentage of the freight depending upon the distance of the consumer from the mill. T h e area east of the Mississippi was divided into zones, and the net result of the new scheme was some reduction of the mill price as compared with 1927. T h e arrangement between the Canadian Newsprint Co. and the Newspaper & Magazine Paper Corporation (hereafter referred to as " H e a r s t " in the interest of brevity) was in effect during the early part of the year. In March control of the Newsprint Co. changed hands, and on April 21 its new management served notice that the contract would no longer be honored. T w o members of the Newsprint Co., the Anglo-Canadian Pulp and Paper Company, Ltd., and the Brompton Pulp and Paper Company, Ltd., found it to their advantage to withdraw and offer their tonnage to Hearst at approximately the same rates as those of the original contract. This resulted in the dissolution of the Newsprint Company in September.

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Following the Hearst-Brompton-Anglo-Canadian agreement, the International on M a y 29 announced what amounted to a $62 price for the remainder of the year. This brought Premier Taschereau into the picture with a statement that the paper companies "must not cut prices." August saw the provincial Premiers, Taschereau and G. Howard Ferguson of Ontario, warning the manufacturers that "the natural resources of the country shall not be depleted at a financial loss to the country. Sales of an enormous tonnage of news print at low prices would represent a national loss." By September it appeared that not all of the large producers looked with favor at governmental interference; some of them were said to face with equanimity a finish fight among the mills with the prize of control going to the survivors. In view of the huge operations of the International and its obvious ambitions, it came to be considered one of those most likely to prove recalcitrant. Hearst injected the next disturbing factor. On October 10 his -subsidiary asked for written bids for one hundred forty thousand tons of newsprint per year for a five-year period. T h e International Co. was the successful bidder, at a price of approximately $57 per ton, freight allowed, in the N e w Y o r k zone. This amounted to $50, f.o.b. mill, and marked a complete break in the price of paper. T h e International Co. had for years made uniform prices to all its customers. Therefore on October 30 it announced the extension of the Hearst price to all of them. T h e danger to other Canadian producers was immediately apparent, and appeals were made to the provincial Governments; responding to these, Ferguson pointed a warning finger at the Nipigon Corporation, Ltd., an International subsidiary. Calling attention to the fact that the company was a beneficiary under contracts with the Province, the terms of which were in default or arrears, he continued: "unless the people interested in the operation of this industry

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take some immediate steps to put the industry on a more satisfactory basis and improve the present situation, the Government will be compelled to give serious and immediate consideration to what action it should take under existing contracts to protect the interests of this Province, its industries, its settlers, its wage earners and its people generally." This was accompanied in November by the formation, under the aegis of the Premiers, of the Newsprint Institute of Canada, Ltd., including the major producers except the International, the West Coast mills, and the Spruce Falls Power and Paper Company, Ltd., the last affiliated with the New York Times. This body was to control and limit production and to allocate orders on the basis of rated productive capacity. The ultimate success of any such scheme depended, of course, upon the ability of the Premiers to induce the International and Hearst to co-operate with its proposals, which obviously involved setting a price higher than the HearstInternational figure. There followed weeks of extremely tangled negotiations in Montreal and New York, during which President Graustein was called on the carpet by Taschereau, stood his ground for a time, and eventually, along with Hearst, agreed to a compromise settlement on February 26, 1929. By this compromise a price of approximately $55 per ton, f.o.b. mill, was established under contracts drawn to run for five years, which most of International's customers, in addition to Hearst, hastened to sign. This was accomplished by pooling and averaging the Hearst contracts, reducing the price he paid to Brompton and Anglo-Canadian, and increasing that paid to International. For the moment the Premiers had won their fight against fifty-dollar paper and had established the principle of political interference in the paper industry. This had been done, however, at the cost of considerable bitterness and without permanently relieving a bad situation, as new production was still being readied to enter the market

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and the inflated values of recent years still characterized the financial structure of the industry. Furthermore, the fundamental problem of security for the industry had not been faced or solved." It remains to trace briefly the relation of the Publishers' Association to the events just chronicled. A family quarrel concerning the propriety of the Paper Committee's conduct of its affairs produced an unusually complete record of the development of policy into the spring of 1929.15 For six years during the nineteen-twenties the Association's Paper Committee had been headed by E. P. Adler of the Davenport (Iowa) Times. According to his own testimony he had deliberately attempted to reverse the Norris policy of bludgeoning the manufacturers into submission. Though a buyer's market characterized his tenure, he had held numerous meetings with the manufacturers, through which he had co-operated in the orderly conduct of the successive price reductions in such fashion that the market was not disrupted. This policy he believed to be to the advantage of the publishers as well as of the mills. In August, 1928, he advised S. E. Thomason of the Chicago Journal, at the time Paper Committee Chairman, that the Association should take steps to prevent the price of paper from dropping too rapidly and sending the market into a disastrous slump. Thomason advised against this procedure, and the Paper Committee confined its activities to reporting the facts of the rapidly deteriorating situation as rapidly as these could be obtained. A special convention of the Association was held in New York on November 12-14, 1928, after the announcement of the Hearst-International fifty-dollar contract. It should be noted parenthetically that this competition was open, that the International figure was not the lowest bid received by Hearst, and that conditions were such that contracts could probably have been let at lower prices—in other words,

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the operation of free competition would have forced prices down still further. Thomason informed the convention of his belief that setting the price level too low would drive many mills out of business so that, when demand quickened, the inevitably short supply would cost publishers more than would be temporarily gained by low prices. Meantime the conferences between the mills and the Premiers continued, and on December 14 the Paper Committee and the Board of Directors met successively with Graustein and with representatives of the Canadian mills. 16 From these discussions it developed that the International had been informed during the week of December 2 that, although its Hearst contract might be allowed to stand at $50, it must charge all its other customers the $55 price which by this time had been agreed upon for 1929. In addition to governmental interference, this directive would have caused the International to violate its promise of October 30 and its longstanding practice of one price to all customers (a policy to which the Publishers' Association had also subscribed for years). A t this point the publishers informed both sets of manufacturers that the Association "stood firmly for a freely competitive newsprint market, free of governmental or co-operative control . . . " and viewed with "alarm and distrust any efforts to control the price of newsprint which interfered with free competition." A t the same time, responding to Canadian pleas that the Hearst price would be disastrous, the publishers agreed that too low a figure benefited neither themselves nor the mills, but still insisted "that the suggestion of price control by manufacturers' agreement or by Government intervention could not leave the newspaper industry complacent." T h e statement concluded with a promise to watch developments and inform the membership if free competition were being endangered. This shows the Association, as represented by Paper

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Committee and Directors, demanding uniform prices and opposing governmental attempts to amend the law of supply and demand, but hinting that prices ought not to be cut too sharply. It indicates, too, that the policy of the publishers in considerable measure paralleled that of the International Paper Co. Developments at the spring Convention revealed a split in the membership, reminiscent of earlier days, on the part of a group whose spokesman was E . K . Gaylord, an Oklahoma City publisher. This element objected to the Paper Committee's actions as truckling to the manufacturers, particularly the International. It accused Thomason and the Committee of telling the manufacturers, in effect, that the Association was not insistent upon a low price for its newsprint, and of urging the mills to get together and charge a price higher than that then prevalent. This was equivalent to charging the Committee with willingness to see the law of supply and demand amended by the manufacturers, if not by governmental action. This policy, it was asserted, encouraged Graustein not to hold out to the bitter end against the Premiers' efforts to make him raise his price to Hearst, and resulted ultimately in publishers paying from $5 to $7 more than would have been the case had free competition prevailed. Glass, a predecessor of Thomason on the Paper Committee and former President of the Association, expressed himself as opposed to the current point of view "that big combinations of capital are for the wholesome benefit of the entire people and of any one industry in this country." T h e Sherman Act, he insisted, was still on the books, and he recalled how in former years the Association had stood for its enforcement. This of course raised the question whether the Adler-Thomason policy or that of John Norris was most in the publishers' interest, and Glass feelingly declared: " I f the association is going to turn itself over to the combination of print paper manufactur-

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ers in this country and say it is to our interest to do everything in their interest, well and good. I don't believe in that policy. I think it is a reversal of the policy of ten years ago, when this association spent so much money in trying to bring about a different result." T h e decision on policy had already been made when Thomason had returned an evasive answer in January to an inquiry from Assistant Attorney General William J. Donovan asking for evidence of manufacturers' violations of the Sherman Act. A t the end of the discussion the Association voted confidence in the Paper Committee's actions, and Thomason resigned as its Chairman. T h e whole episode indicates the desire of the management to see prices stabilized, even if stabilization involved payment of a higher price than might have been secured by completely free competition. T h e smaller publishers may perhaps be pardoned for indulging in a few qualms at this point. 17 T h e waning 1920's thus found the paper industry contending with its own problems when it was swallowed in the depths of international depression in 1929. As with other branches of the economy, its ills were in considerable measure of its own making, born of failure, under the impetus of profit-greedy promoters, to limit expansion to likely demand. T h e plight of the mills was plain enough: their need was for some method of stabilization whereby supply and demand might be balanced, unemployment and ruthless destruction of the forests be averted, and danger to the economic structure be minimized. As has been indicated, the issue soon became a political one in the Dominion, with provincial authorities alert to prevent cutthroat competition from taking toll of weaker companies and exhausting natural resorces on unprofitable levels. This sense of public responsibility developed more slowly below the border, and it was not until the landslide of 1932 brought in the Democrats with their more socially minded program that the N I R A experiment faced some of the same problems with

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which Canadians had been struggling for years. T h e concluding chapter will endeavor to trace the development of publishers' policy, foreshadowed in the events of 1 9 2 8 - 1 9 2 9 , in the light of political efforts to speed economic recovery on both sides of the border.

CHAPTER

VIII

Efforts to Combat D e pression, 1 9 2 9 - 1 9 3 6

I

recalled that as part of the February 26 arrangements the International Paper Co. offered its customers five-year contracts. These provided that for 1930 and each succeeding year the company would indicate, before November 30 preceding, what the coming contract price would be. This meant that any steps to induce price changes for 1930 must be initiated prior to this date in 1929. M a n y Canadian manufacturers had done badly during the year. Mills ran generally at about eighty-five per cent capacity, turning out four hundred thousand tons above the four million tons consumed. T h e impetus of previous years carried sixty-five millions of new capital into the Canadian industry. 1 Under these circumstances it was inevitable that Canadian members of the Newsprint Institute, who watched the International's mills running at over one hundred per cent capacity while their own were held down by agreement, should urge improvement in the basic price so that Canadian investors might receive dividends. T h e Premiers were also interested in better prices} they were interested, too, in distributing the tonnage equitably so as to keep a maximum number employed during a difficult period. Neither were they very happy at seeing the International's mills eat up Quebec spruce in defiance of the Newsprint Institute plan of controlled production. T h e y faced, however, a difficult dilemma: if the price were raised, production would T WILL BE

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go down, and fewer people would be employed. These facts furnish the setting for the price maneuvers of late 1929. 2 These maneuvers resulted in Canadian failure to raise prices, a failure brought about by policies of the Publishers' Association and the International Paper Co., working toward a common end though probably not in concert. Publishers' policy crystallized in opposition to higher prices; the International preferred continued large production at current figures to controlled production at higher rates; their combined pressure was too much for Premiers and Newsprint Institute together, and the 1930 price remained at the 1929 level after efforts of Institute members to raise it had proved abortive. By early October the manufacturers were in session discussing 1930 prices, and by the middle of the month it was an open secret that the Hearst-International contract was the dreaded obstacle to increases. Taschereau soon announced his desire for these, and promised that the Provinces would again intervene if a price war threatened. H e followed this by stating that Americans were welcome in Canada, but must "live . . . a Canadian life and not injure our basic industries by unwise competition . . . public opinion will not agree to be dictated to nor have our national resources imperiled for the benefit of a most lovable neighbor." T h e Publishers' Association met on November 1 1 - 1 3 , with the Paper Committee still without a Chairman, the Board of Directors having been unable to persuade anyone to succeed Thomason. T h e Board refused to commit the Association on the newsprint question, but invited discussion. A cautiously worded resolution was adopted, showing that the members "viewed with deepest concern the continued effort being made to negative the operation of the law of supply and demand and to substitute in its stead an artificial control of the price of newsprint and reaffirms its approval of the uniform contract price basis." W h i l e the publishers were in session Graustein

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was in Montreal (November 12), on summons by Taschereau, who, said Graustein, insisted that the International charge $60 for its 1930 paper; this demand was repeated by long-distance telephone on November 25. Developments warranted the calling of a special Publishers' Association convention for December 9. By this time both Premiers had threatened the International with reprisals if it did not increase prices to $60, and two Canadian concerns, St. Maurice Valley and Abitibi, had announced such a step. T h e Paper Committee by this time had a Chairman ( W . G. Chandler of the Scripps-Howard chain), and the A . N . P . A . a policy, though still not too vigorously expressed, of opposition to price increases. Resolutions proposed to seek redress at Federal hands, asserted the present to be an inopportune time to advance prices, and committed the newsprint question to the Directors and Paper Committee with power. Upon adjournment of the Convention the interim body met and directed messages to the Newsprint Institute and the mills (including Price Bros.) which had announced price increases: "your proposal as to price and terms was unanimously disapproved. . . . " A subcommittee met three days later with Institute representatives. Here the publishers' proposal was unveiled: President E . H . Butler "stated that if the manufacturers should maintain the present price for newsprint for 1930, and should meet with the members of the publishers' committee to discuss the situation of future prices from every angle, publishers would then be in a more receptive mind for consideration of a three-year contract on the basis of prices and conditions which might be determined at such meetings} but that if the present program as to price and conditions is maintained, the natural reaction on the part of publishers would be that such a stand is arbitrary, and would result in causing customers to seek other sources of supply, including encouragement of importation of foreign newsprint." On December 20

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the committee summoned Graustein and expressed itself as opposed to any rise in price. T h e following day the International announced "through the American Newspaper Publishers' Association that the present price of $55.20 a ton for newsprint would remain unchanged for the first six months of 1930." Thirty days' notice would precede any increase after July x, 1930. By the end of the year the Institute companies had given in and followed the International's price, despite Taschereau's threat to appeal to the Dominion Government for assistance in the provincial fight against that company. Publishers' threats, including that of European competition, plus International's recalcitrance had thwarted plans for controlled production. 8 A s depression deepened in 1930 the publishers were moved toward a less intransigent attitude on prices by fears lest a worse fate befall them through industrial mergers which over a period of time might produce even more evil results. Premier Taschereau found himself increasingly crowded between the entrenched position of the International Paper Co. and the desire of Institute mills for greater income—a cross-fire which shortly stimulated political opposition in the Province and induced in the Premier the peevishness which sometimes accompanies ineffective effort. Publishers, Premier, and Institute all conducted their operations with a weather eye on the International, its co-operation being the condition precedent to the success of any scheme for stabilization. Merger talk continued, Institute control broke down, and a free market was in sight as the year ended; in sight, too, was insolvency for a large share of the Canadian industry. Pursuant to President Butler's suggestion of December 9, 1929, the Paper Committee held long discussions with Col. John H . Price, of Price Bros., Chairman of the Newsprint Institute. These resulted in a proposition, presented in a letter of April 10, 1930, the subject of considerable debate at the

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Publishers' annual meeting of April 23-25. This agreement between Institute and Committee suggested a solution in terms of gradually increasing price over a three-year period, predicated of course on the co-operation of the International, whose five-year contracts at the moment dominated the picture. It represented a degree of co-operation between publishers and Canadian manufacturers which reflected a much more realistic attitude toward the plight of the mills than had previously characterized A . N . P . A . policy. A s presented to the convention by Chairman Chandler of the Paper Committee, the Association's choice lay between two alternatives: (a) to let matters take their course in the hope that conditions would hold prices level, or even reduce them during 1 9 3 1 ; or (b) assume that stabilization in the industry, accompanied over a period of years by some rise in paper prices, would best serve the interests of both publishers and manufacturers. Price's letter reflected the latter, suggesting that the existing rate be continued through 1930, with increases of $2.00 per ton in 1931, a like figure in 1932, and of $1.00 in 1933, these arrangements to be written into three and one-half year contracts effective July 1, 1930, and with the understanding that the Association would encourage its members to patronize Institute mills. T h e Committee, while expressing its belief that stabilization was essential, passed the report to the convention without endorsing Price's rates. It suggested further its belief that continuance of present prices would lead to consolidations which, by concentrating control in fewer hands, would in the long run "place newsprint prices on a much higher level than if the present competitive situation continues on a price stabilization program." Chandler's comments made it abundantly clear that the whole scheme was predicated on International's willingness to adjust prices upward on the five-year contracts negotiated in 1928, which still had three years to run. H e gave his personal

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opinion that unless some such scheme were adopted, there would be an era of cutthroat competition and runaway prices, followed by consolidations which would leave the publishers worse off than ever. Adler suggested an alternative five-year program, to take effect January i , 1931, but was informed that the Institute felt unable to commit itself beyond the limit proposed by Price. It was pointed out again that Price had secured agreement to his scheme only over spirited opposition among his own group, indicating the desperate nature of the situation. F . I. Ker of the Hamilton (Ontario) Spectator, a member of the Committee, pointed this up sharply: " I f the matter drifts on one ultimate thing is going to happen that can happen in two ways: Either by natural means or by unnatural means, the supply of newsprint paper from Canada is going to be restricted. T h e natural means are the failures of the high cost mills. T h e unnatural means are the merger of mills and the cutting off of manufacture in the high priced mills. I assure you that one of those alternatives is very much closer than many of you believe . . . I have a feeling that some of the large manufacturers would not be at all sorry to see the Institute's latest proposal turned down . . ." Glass and Gregory expressed themselves in opposition to stabilization, on the theory that the whole scheme was a hold-up by the mills, after which resolutions were adopted approving "the principle of a broad economic stabilization of production and distribution of newsprint paper over a period of years . . . " but studiously avoiding the price question by asserting that "the price to be paid for newsprint at any time is a matter to be determined by each publisher in the exercise of his own independent judgment." 4 Meanwhile Canadian production dropped to sixty per cent of capacity, and Premier Taschereau tried with decreasing effectiveness to press the International into acquiescing in

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higher prices. This ineffectiveness was caustically referred to by Mayor Camillien Houde of Montreal, leader of the Opposition: "Here is a company whose object is patent, notorious, to wipe out other industries of the same nature in this province, and the Prime Minister, and the Cabinet and the Government are unable to prevent that attitude." The political implications of the newsprint slump were obvious enough in Canada, where much government revenue was derived from stumpage dues; inadequate prices would endanger payment of the dues and, in turn, imperil any Government caught by such a default. It is thus understandable why Taschereau, goaded by Houde, and by the specter of default, threatened the International with increased dues (in a speech to Parliament, January 14) asserting: "we owe nothing to the International, that it owes us nothing, we are therefore very free in our relations with the company." A deputation of workers visited him early in February to complain that while their mills were forced under the Institute agreement to run at seventy per cent capacity, the International mills were running one hundred per cent or more. H e could only reply that this permission had been granted in return for International's promise to take its United States mills off production of newsprint; he further hinted broadly that if the Canadian concerns were alive to the possibilities, they would combine among themselves and force the International to agree to higher prices, but admitted that his own efforts had not yet succeeded. A few days later he delivered a pin-prick by refusing International permission to cut trees under the legally-prescribed size, with resultant disemployment of several hundred woodchoppers. This seems to have been the extent of governmental accomplishment during The Canadian situation deteriorated steadily throughout the year, and by the time the Price proposal was submitted to

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the Publishers' Association, rumors of mergers were in circulation, giving support to statements made before the Publishers' convention. These continued through the summer, and though none had been completed, by November the prospect appeared imminent. Meantime the Newsprint Institute encountered increasing difficulties. Newfoundland mills, International mills, and some Canadian mills which entered production after the scheme was elaborated were able to run to capacity, to the dissatisfaction of members; some nominal subscribers seem to have taken their tonnage-limitation agreements lightly. In September an arrangement was consummated whereby Hearst bought into the Canada Power and Paper Corporation, L t d . This concern was the largest producer of newsprint in the world, having absorbed the St. Maurice, Wayagamack, Laurentide, and Belgo-Canadian companies to amass an annual capacity of three-quarters of a million tons. Since Canada Power had been one of the influential members of the Newsprint Institute and presently became one of the most active proponents of consolidation, it was apparent that the Institute's days were numbered. Col. Price shortly resigned as head of the Institute. T h e end of the year found matters in a state of flux. By December the Newsprint Institute had abandoned its efforts to restrict competition for business, and the Paper Committee was advising the Publishers' Association to deal with such firms as seemed likely to stand aloof from the proposed mergers. A n open market was in prospect for 1931. This, however, did not promise a complete solution of the problem. M a n y Canadians began to feel that the best method was to abandon efforts to sustain prices by such agencies as the Newsprint Institute and let things find their own level through competition which would eliminate the weaker mills, particularly in the States, and permit the stronger Canadian mills to take over the market and raise prices. T h e other alternative,

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through consolidation, carried its own problems, involving closing down high-cost Canadian mills and absorbing their valuation into a capital structure already swollen beyond reason} there was serious doubt whether the low-cost mills could carry these frozen assets at profitable levels. At all events, the future was not bright.8 International and Canada Power announced early in the year that there would be no change in price, but buyers who took the trouble to do so could find lower prices and competitive bidding. Canadian firms were now in such dire straits that many of them went into receivership. One of these was the Minnesota and Ontario Company, which, after being shut down for some months for reorganization, went back into production and by late March was offering paper below the contract rate in order to secure business. This seems to have precipitated the action which followed, in which Institute mills cut prices without consulting the International and forced the latter to follow suit—the first time for some years that the International had failed to call the tune. In mid-April reductions of $3.00, retroactive to January 1, were announced, as well as a further cut of $2.00 effective May 1, reducing the f.o.b. price to $50 ($57 New York). Canadian mills with a total production of 6,774 tons daily followed this lead, as did International somewhat more tardily on May 16. It also proposed a price schedule to carry through six years on a gradually ascending scale in an effort at stabilization. T h e original reductions came out about the time of the Publishers' annual convention, and the Paper Committee gave its opinion "that existing conditions do not call for any action by your Committee at this time." On December 2 the International was quoted as asserting that prices would hold steady through 1932, but five days later a Canadian announcement dropped another $4.00, making the New York price $53 for the coming year, and the International promptly followed.

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These events reflected a hectic year in Canadian newsprint history, the details of which lie outside the sphere of this study, but whose broad outlines must be kept in mind. Bankruptcy and reorganization formed the keynotes of the story and indicate why it was impossible longer to maintain an agreed price. Merger talk continued, but action was again deferred. T h e problem was by this time in the hands of a committee representing banking interests which was surveying the industry with a view to recommending a solution in terms of mergers. Meantime, nature had begun to take its course in the reappearance of competitive prices. T o the publishers, this offered an opportunity to exert further pressure for still greater reductions, but Chandler's report to their fall convention exhibited greater sympathy toward the hard-pressed mills than consumers had been wont to manifest. W h i l e insisting that newsprint price reductions had failed to offset the decline in advertising revenue, he nevertheless asserted that "with rare exceptions, publishers do not welcome conditions that result in loss to investors and inadequate pay to workers in the newsprint industry. Demoralization of our source of supply predicates trouble for us." H e went on to point cautiously to the dangers of a runaway market and to suggest the desirability of an orderly rather than pell-mell reduction of prices. A signpost was here erected pointing to better relations between old-time enemies.7 It will be noted from the foregoing account of 1931 that events were preparing the way for two possible solutions of the price question: one, through removal of the weaklings by competitive prices; the other, consolidation to save as many mills as possible. Neither had run its course to completion. T h e next year, 1932, repeated this story, with the addition of revived suggestions of pooling (reverting to the principle of the Institute plan) as a remedy, all this against a background of reduced consumption and advancing insolvency in the

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Canadian industry. In fact, by September all the leading Canadian concerns except International and some newspaperaffiliates were either in bankruptcy or knocking at its portals. T h e bankers' committee continued its inconclusive measures. These were based upon a statistical study of the industry as a basis for consolidations which would save a maximum number of mills. Unfortunately, each time a mill went into reorganization, the whole question of its relation to the proposed consolidation must be canvassed with the new management in the light of new conditions. By the time the committee had completed its studies in the early autumn, a price war had broken out and reached such proportions as to make immediate stop-gap measures more essential than the committee's long-run proposal. In June, Price Bros, underwent a reorganization which brought L o r d Beaverbrook into control. H e announced that Price Bros, would not participate in the proposed merger being worked out by the bankers' committee. In mid-September this concern announced a drastic price reduction, from $53 to $47.50, New York. This evidently reflected cutthroat competition on the part of smaller producers, offering low prices in order to keep running at full speed, combined with competition from Finnish and Scandinavian paper which could be deposited at N e w Y o r k on favorable terms because these countries had followed Britain off the gold standard. International shortly met Price Bros, and cut still further to $46, N e w Y o r k , thus again taking the lead in setting prices. Freight and other allowances reduced the practical price level to $45, where it remained until the beginning of 1933. T h u s was inaugurated a bitter price war, attended by much switching of contracts, which drove the spot market to $38 and which by late October made a world-wide crisis imminent. In the scramble International took contracts away from its Canadian rivals to a point where the situation became des-

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perate. Under these circumstances Premier Taschereau entered the picture with a repetition of his earlier warnings of governmental intervention unless the mills succeeded in getting together. T h e evidence at hand does not indicate the origin of the next proposal, probably a counsel of desperation, in the form of a renewal of the pooling device formerly embodied in the Newsprint Institute. This evidently gained headway as a temporary expedient, though the bankers' committee still clung to the idea of consolidation as a permanent solution of the problem. The year thus ends with the immediate emphasis upon cutthroat competition, with the International seemingly ahead, with pooling and prorated distribution suggested as a proximate solution of the problem, and with consolidation still hopefully considered by the financial interests.8 With 1933 the focus of attention moves temporarily south of the border, where shifting tides of politics brought a new Administration into power at Washington. T h e expedients of the Rooseveltian New Deal included the National Industrial Recovery Act ( N I R A ) , designed to aid the American economy to lift itself by its bootstraps. While primarily directed toward domestic affairs, it was viewed hopefully to the north as a possible stabilizing factor in the Canadian situation through its potential influence on prices. While the Canadian industry in a sense marked time waiting for developments, the price competition continued. On April 18 the International announced a further reduction of $5.00, bringing the level down to $40, New York. This reduction, like others before it, seems to have resulted from competitive prices made by small independent producers and mills in receivership. The summer saw a ray of hope in the signing of the N I R A (June 1 6 ) , succeeded by a further threat of price warfare when the Powell River Company contracted with Scripps-Howard for paper at $30, delivered in Philadelphia.

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Events of the autumn, to be noted presently, furnished a temporary stay to more price-cutting. Nothing was accomplished on the consolidation scheme.9 T h e National Industrial Recovery Act and its effectuating agency, the National Recovery Administration ( N R A ) , proposed to attack the problem of depression from the rear, by arbitrarily raising wages and shortening hours of employment in an attempt to create buying power which in turn would stimulate business into activity. T o facilitate the necessary industrial agreements, any limitations under the antitrust laws were repealed. Each industry was to be organized under a Code Authority composed of its own members for the management of its own affairs through the agency of a Code of Fair Competition. One main objective of the whole proposal was, of course, raising prices. It should not be too difficult to fit these basic principles into the newsprint picture. American manufacturers, depressed like their Canadian counterparts, would be likely to welcome any machinery by which prices could be increased, particularly if such machinery could be adjusted to lessen Canadian competition. Canadian producers, though not directly involved, would be willing to co-operate in the hope of halting the ruinous price competition under which the industry had labored for years. Only the consumer of newsprint might be in a mood to object to increased raw material prices while his finished product was still subject to depression conditions. T h e result of these factors was another period of hostility between publishers and manufacturers which lasted as long as did the Blue Eagle of the N R A . 1 0 T h e newsprint industry was presently organized under the name of the Newsprint Manufacturers of the United States and prepared a code for presentation to the N R A . As filed in mid-July it boldly tackled the price problem. A f t e r commenting on the unprofitable prices ($40-41, N e w Y o r k ) in

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effect in the industry, it proposed: " U n t i l a price having proper relation to cost can be determined for the industry, and approved by the President, the minimum base price of newsprint in the industry shall continue to be $46 a ton . . . " A month later a modified and shortened code was filed, covering hours and wages, but leaving price for later determination. Evidently still a third code was completed just prior to the first public hearing on September 6. Most of the testimony was devoted to a snarl over the code's attempted definition of standard newsprint and over wages and hours, but Elisha Hanson, counsel for the Publishers' Association, fired the first gun of a bitter battle over prices. Hanson voiced the Association's objection to a code provision for the establishment of a "standard method for determining current cost of any product of the industry, and for a requirement that no member shall sell any such product below cost." H e argued that "application of this provision is susceptible of manipulation to bring about any price increase which the industry figures it can get away with." And finally, "no more striking monopolistic effort could be cited than this attempt of a small group of manufacturers, who admittedly cannot supply half of the country's requirements, to set up a control, through this code, of the price structure of newsprint paper." Canadians, watching hopefully, were disappointed at the failure to provide restrictions which would prevent northern manufacturers from underselling domestic producers. 11 T h e next move was a meeting, held on the invitation of General H u g h S. Johnson, general administrator of N . R . A . , on October 24. It gathered representatives of United States, Canadian and European manufacturers for the purpose of establishing a minimum price for newsprint. Those present agreed to a three-week armistice in the current price war (which was continued from time to time into the spring of 1934) and to recommendations made by C. R . M c M i l l e n of

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the St. Regis Paper Company, recently appointed industrial adviser to the N R A on paper codes. A l l hands agreed to adhere to three price stipulations: (a) no price to be established for any delivery after 19345 (b) no price for 1933 or 1934 deliveries to be below present prices, set at $41; (c) no price to be set for 1934 without provision for quarterly revisions to bring it into line with current figures. General Johnson pointed out the complexities of the newsprint problem and warned the Canadians of the desirability of co-operation by indicating that under the law tariffs might be revised upward if necessary in the interest of domestic producers. It would seem that this was a gratuitous threat, as Graustein, who was present, suggested a Canadian organization to parallel the News Print Manufacturers' Association, and Taschereau, when the proposals were published, promptly promised that Quebec's producers would comply with any minimum price set in Washington. T h e Newsprint Export Manufacturers' Association of Canada was formed in early November to implement Taschereau's promise. President Franklin D . Roosevelt signed the Newsprint Code on November 17, and it went into operation ten days later, without any price-fixing provisions. 12 O n January 6, 1934, the Code Authority, again approaching the price-fixing problem, proposed what came to be referred to as the Supplemental Code. This recommended an agreement between Canadian and American producers not to exceed the $41 minimum, to file information on price schedules and their revision, and to establish a joint committee of four from each association with power to confer "with respect to the stabilization of the industry and the elimination of unfair practices and destructive competitive prices and to report the results of such conferences with their recommendations to the Associations." T h e agreement was to be terminable November 10,1934, upon notice given one month earlier. It also

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proposed that the Code Authority be given the power to adjust or modify prices on the basis of changes "in the cost of manufacturing or in the value of the dollar and by conditions in the newspaper publishing industry." This was submitted to the Paper Committee of the Publishers' Association, was disapproved in its entirety by that body, and became the subject of a public hearing on February 1 at which it was vigorously opposed by the publishers. 13 This proposed Supplemental Code called forth, in addition to the A.N.P.A.'s unqualified hostility, a considerable expression of individual and Association opinion on the part of the smaller press. These appeared either spontaneously or in response to a request by W . W . Pickard, Deputy Administrator of N R A in charge of newsprint." T h e y indicate clearly the previously-evident division between the large and small press, and show the latter more favorably inclined toward the manufacturers, whose recent treatment of them was the subject of frequent praise. T h e small-fry looked to the Code to maintain the equality of treatment and the level prices as between large and small consumers which had recently characterized the policy of the manufacturers, particularly of the International Paper Co. T h e y expressed themselves as willing to pay a bit more for their paper in order to perpetuate this stability in their relationships with their suppliers, and accused the metropolitan press of being willing to destroy the domestic industry in order to secure a favorable price differential from foreign manufacturers. T h e y also manifested a desire to preserve the domestic industry as a check on foreign competition. O n the whole they tend to clarify the position of the A . N . P . A . in relation to the problem at hand. In presenting the Supplemental Code at the hearing of February 1, Edgar Rickard, Chairman of the Code Authority, stated that the original Code signed November 17, 1933, provided no protection for domestic mills against foreign im-

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ports. H e reported that under existing conditions of oversupply in relation to demand there had been "an irresistible pressure on the part of individual companies to secure as large a volume of sales as possible." H e showed that newsprint had been offered and sold as low as $30 per ton, and also oifered on a guaranteed differential of $8.00 lower than any price quoted by domestic producers. H e presented figures showing that paper cost twenty-four American producers $43.28 per ton during the first half of 1933, without allowance for fixed charges or dividends. H e noted an exchange of letters between the Code Authority and the Publishers' Association in which the latter served notice of its intention to "take every proper step to prevent . . . approval . . of the Supplemental Code. A representative of the Michigan League of H o m e Dailies, a manufacturer, R . S. Kellogg, Secretary of the Newsprint Code Authority, and the Chairman of the Paper Industry Code Authority seconded Rickard's position. Hanson opened the publishers' attack on the Supplemental Code. H i s initial statement indicates clearly the Association's approach: " T h e purpose of this Supplemental Code is twofold: "First, to set up a monopoly in the manufacture and sale of newsprint paper for use in the United States; and "Second, to obtain for the monopoly absolute power over the price to be extracted from consumers of newsprint paper. " T h e parties to the proposed monopoly are the Canadian and United States manufacturers of newsprint paper. Their God-parent, they hope, will be the N R A . " T h e i r proposal in its entirety is repugnant not only to the anti-trust laws of this country but to the expressed prohibition against monopolies in the National Industrial Recovery Act. It is violative of sound business economics. A n d it is contrary to the public interest . . . " H e directed his plea further toward the inability of the

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domestic industry to meet American needs, showing how, since 1926, it had been unable to supply as much as half the total requirements of the market. A n d he noted particularly that the proposed arrangement involved concerted action by both Canadian and American producers under an agreement whereby no price changes could become effective without acceptance by both. These provisions, he insisted, placed the Supplemental Code in violation of the N I R A , the Sherman Act, the Clayton Act, and the Federal Trade Commission Act. H e pointed out, too, that for every dollar of increased price allowed the domestic industry in order to compensate for increased costs under N R A , two dollars would be put into the pockets of the Canadian industry, which then furnished two-thirds of the domestic consumption. H i s strictures on the proposal were seconded by Paul Patterson, representative of the Scripps-Howard papers, large purchasers of newsprint. C. R . M c M i l l e n , the Canadian adviser to the N R A on paper codes, in a reply to Hanson's argument (February 7, 1934), paid his respects to the "legalistic" character of objections made by A . N . P . A . to the Supplemental Code and accused the publishers of being willing to condone destruction of the domestic newsprint industry by denying it N R A benefits, in order to guarantee to itself continued cheap paper through unrestricted competition. This refusal, he asserted, "is a suggestion that no patriotic publisher could make if he understood the facts . . . " H i s principal argument was directed toward preservation of the existing domestic industry, even at the cost of temporarily increased paper prices under N R A , as an insurance policy against complete removal of the industry abroad, resulting ultimately in much higher prices. H e pointed out that any newsprint mill still surviving in the United States had given evidence of inherent vigor and economic soundness, and concluded: " T h e question is simple. Shall a strong and seasoned United States industry, already

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the victim of an uninterrupted ten-year decline in price, comprising the hardy survivors of that tremendous ordeal, be squeezed to a slow death by the concurrent pressure on the one hand of additional operating costs imposed by our Government in the cause of recovery, and on the other hand of cutthroat price cutting by a few, perhaps desperate, foreign mills?" Whatever the merits of the respective cases, the publishers' pressure was sufficient at the moment to prevent effectuation of the main objective of both original and Supplemental Codes, "a swap of maximum hours and minimum wages for cost protection} that is, a provision in one form or another about not selling below cost." 15 Another experiment in the same direction met a similar fate. O n April 3 the Paper Committee met with the Newsprint Code Authority in Washington upon invitation of M a j o r George A . Berry, Division Administrator, to hear the latter's proposed solution. This would create a Newsprint Planning and Adjustment Board to replace the Code Authority, and would provide for publisher representation in fixing prices. It was drafted without the manufacturers' participation, was presented to General Johnson, and received his approval on condition that no minimum price be effective until set by the Board. It clearly indicated governmental deference to the voice of the press, since it marked "the first major departure in government code policy against consumer or labor voice in matters affecting the direct management of an industry." It called for a nine-man board, three from the industry, three from the press, one labor representative from the newsprint and one from the printing trades, and an impartial chairman to be appointed by General Johnson. Its acts were subject to his disapproval, and non-unanimous decisions were to become effective only with his consent. Since it was fundamentally a price-fixing scheme, the industry ac-

E F F O R T S TO C O M B A T

DEPRESSION,

I929-I936

l6l

cepted it and the publishers rejected it at their Annual Convention on May 2. President Howard Davis of the Publishers' Association, however, requested a second public hearing, which was set for August 3. Meantime Pickard had gone ahead with tentative plans for putting the April scheme into operation, on the strength of "scores" of letters from publishers supporting it. Chairman Rickard, in opening, indicated that the Code Authority found "some difficulty in understanding why it was deemed necessary to call this public hearing . . ." since the attitude of all parties was well known. It served as a vehicle for another vehement attack on the manufacturers by Hanson, who was seconded by Bainbridge Colby, who in 1 9 1 7 had been one of the government prosecutors of the newsprint monopoly. In addition to previous avenues of attack, the latest proposal was opposed on the ground that it permitted the apportioning of paper among consumers and on the whole was tantamount to government control and so a danger to freedom of the press. Hanson stated that the "American Newspaper Publishers' Association wants no agency of the Government to be placed in a position to tell newspaper publishers of this country how much paper they may use in the production of their newspapers, from whom they must buy it and how much they shall pay for it. "This board cannot be created. I say this advisedly . . . " This seems to have marked the end of formal action in the matter prior to the Schechter case decision in May, 1935, in spite of various pressures on the Administration to take action to relieve the industry. It is not unlikely that the bitter fight between the publishers and the Administration over the Newspaper Code, a matter which lies outside the province of this study, may have rendered the latter wary of forcing a showdown in an issue where the organs of public opinion would

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have been marshaled in force against a policy already under heavy fire.16 T h e "official" history of the Newsprint Code, written by the Deputy Administrator, reflects in considerable measure the industry's dissatisfaction with the Government's donothing policy: " T h e only other critical comment which the Deputy's Office wishes to add concerns itself with the lack of desire on the part of N R A , or the President, to help this Industry out of its difficulties. Just what the basis of this attitude was, is not known, but it is strongly suspected that the attitude of the Newspaper Publishers Association was a very strong element in spite of the fact that many of the smaller and Mid-Western publishers were in favor of the stabilization proposal of the Industry. Every attempt on the part of the Newsprint Industry toward price stabilization remained unsuccessful in view of the strong opposition of the large newspaper publishers who took the attitude that the domestic industry was not fit to survive. " T h e ultimate results of the lack of such an Industry in the United States and the utter dependence of the newspaper publishers on foreign manufacturers not controlled by any Constitution or Supreme Court was apparently lost sight of in the immediate object of holding down Newsprint prices to a level ruinous both to the domestic and Canadian producers." 1 7 T h e conclusions of Edward R . Jones, in charge of a preliminary study of the operations of the industry under N R A , written in 1936, may well serve as a terminal summary of this period of newsprint history: " T h e Newsprint Industry probably emerged from the code period in no better condition than it entered it. This was due to the fact that there was no improvement in the price situation and the industry was still at the mercy of its customers. This situation could not have been remedied by the

E F F O R T S TO C O M B A T DEPRESSION,

I929-I936

163

code without resort to Section 3e of the Act, which proved to be contrary to the policy of the Administration . . . "The relationship between the Administration and the industries was usually pleasant and harmonious. The Newsprint Industry was definitely disappointed and disillusioned by the Administration's failure to grant it tariff protection from foreign, chiefly Canadian, producers. As the opposition of the publishers to the proposals of the Newsprint Code Authority created a situation of a delicate and inflamable [sic~\ nature, the refusal of the Administration to take any steps toward raising the price of newsprint still appears to have been the wisest and safest course . . . "In conclusion it is difficult to state just what was the effect of the codes themselves, and what part of the improvement in the industry has been due solely to general business conditions. Possibly the greatest impetus for the revival came in May and June, 1933 in anticipation of the benefits expected to accrue from N.R.A. This would tend to substantiate the belief that the greatest boon of N.R.A. in these industries was psychological. The industries did not suffer the expected setback following the Schechter Decision. Agitation for voluntary codes has been discontinued. There is a feeling among some informed individuals that the paper industries have gained all that they can gain from codes, that a continuance of the codal form of industrial control would not mean an improvement in business . . . " 1 8 Turning back from American stabilization efforts to market trends, it should be noted that the tide of consumption turned toward the end of 1933 and that the first quarter of 1934 showed production up to 93 per cent of the corresponding period of 1929. This production, however, brought only 53 per cent as much as in 1929. With prices at the old $40 level the Canadian industry complained that the only gain was in cutting losses through a larger volume of production} the us-

164

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ual cry for a higher price resounded in the autumn of 1934. This was prevented by the action of the St. Lawrence Paper Company, a member of the Canadian Export Manufacturers' Association, in contracting with Scripps-Howard and Hearst for 1935 deliveries at the previous price. W h e n the agreement was announced Premier Taschereau indicated that his Government could not tolerate "such complete disregard of the public interests . . . " and moved toward punitive measures which resulted in withdrawal of certain concessions as to stumpage dues and permission to cut undersize timber. This threat moved the Publishers' Association to threaten in turn: "Should Premier Taschereau and certain Canadian banks, by unusual restrictions imposed upon the St. Lawrence Paper Mills Company, succeed in establishing a precedent whereby contracts between Quebec mills and United States publishers may be arbitrarily vitiated, the Directors and the Newsprint Committee of the American Newspaper Publishers' Association will be compelled to advise its members to turn their attention immediately to other available and potential sources of supply." Taschereau countered by proposing to appeal to Dominion authorities to prevent exportation of paper at prices below production costs. This could be done under the recent Dominion Marketing Act permitting the central government to regulate prices of certain exports. T h e company stuck to its guns, however, even in the face of an attempt by International and others to raise the price to $42.50, and after considerable skirmishing the 1935 price remained unchanged. 19 Conditions improved rapidly in 1935, and October production and sale of newsprint were at the highest levels in the history of the industry. So vigorously did this tendency operate that by December predictions were being made that a seller's market was in sight, with mills operating at 80 per cent capacity and the remaining 20 per cent not being immediately available. Price was the only disturbing aspect.

E F F O R T S TO C O M B A T

DEPRESSION,

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Here Quebec entered the picture with a measure permitting the Government to raise stumpage dues on Crown-land wood from $ 1 . 3 5 to $6.00 per cord, the lower rate to be applicable to companies agreeing to certain conditions on sales prices. The alternative was to be made effective by Order in Council at the discretion of the Government. The Publishers' Association recommended in reply to this that its members "place their commitments as far as possible with United States mills, with whose government they can deal directly, or with mills operating in foreign countries, whose governments have not threatened to interpose themselves on bona fide contracts." T o which Premier Taschereau is said to have replied, "Pure bluff." T h e Great Northern Co. took the lead in setting 1935 prices, with an announcement in October of a rise of one dollar, the first effective price increase since 1923. This was a disappointment to the Canadian producers, but they were not yet in a sufficiently stable position to unite for a greater increase.20 This year also witnessed the first important impingement of the tariff on the newsprint situation since 1 9 1 3 . Secretary of State Cordell Hull's program of Reciprocal Trade Agreements, with its policy of whittling down the exorbitant Hawley-Smoot Tariff by reciprocal concessions to individual nations, generalized through the most-favored-nation clauses, was being applied to Canada during this year. An agreement with Sweden had already bound on the free list continued entries of wood pulp, and it appeared that the same favor would be extended to Canada. Such a policy applied to newsprint would, the manufacturers urged, subject the domestic industry to unlimited Canadian competition. Binding newsprint on the free list should therefore be accompanied by a quota system applied to Canada and any other supplying country, on such terms as to permit complete utilization of the domestic machinery and expansion of plant capacity when de-

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mand again put pressure upon supply. This favor was not granted, for when the agreement was published late in the year it was found that both wood pulp and newsprint were bound on the free list for the duration of the agreement. 21 A year of transition followed in 1936. W h i l e the Canadian industry was still clearing away the debris of depression (four of the five major producers were still in receivership), Dominion and provincial authorities moved to prevent a recurrence of previous disasters. Consumption outspeeded production to a point where demand began to approach supply. T h e interventionist attitude of the Provinces betokened a situation which might make price increases easier of achievement. Under all these circumstances the publishers' pressure was unequal to the task of preventing higher prices for 1937. April saw Ontario follow Quebec's example in legislation giving the Government power to charge five times the regular stumpage dues, plus a fine of $1000 per day for conducting operations which were detrimental to the public interest. T h e Dominion Marketing Act was also amended so as to bring newsprint definitely within its provisions. This led the Paper Committee to warn the Publishers' Association that "the time is near when United States publishers who may purchase Canadian newsprint will not have to deal alone with the manufacturer of their choice, but with a coalition of the Canadian Government and of the Canadian manufacturers . . . " and to repeat its 1935 advice to deal where possible with other than Canadian mills. By April 11 Peter Heenan, Ontario's Minister of Lands and Forests, was informing manufacturers of the provincial decision, taken after consultation with Quebec, that stability in the industry would be promoted by prorating of tonnage among the mills, and warning them not to commit themselves to contracts prior to July 1, 1936. H e continued: " T h e government is asking the industry itself to put its house in order . . . " 2 2

EFFORTS TO

COMBAT

DEPRESSION,

I929-I936

l6j

Under these circumstances the signs pointed to price increases, with a note of warning that they should not be too great, lest untoward developments ensue. In M a y the Pafer Trade Journal quoted from a report of John Stadler, a consulting engineer involved in the reorganization of Price Bros., agreeing with other authorities "that newsprint at more than $45 per ton would encourage the development of newsprint manufacture in the southern part of the United States . . . " Publishers therefore received, almost with a note of relief as if they had been spared something much worse, the Great Northern's announcement on August 3 that the 1937 price would be increased only $1.50 (to $42.50) per ton. T h i s "assured an orderly advance in the price of newsprint and a stable market . . . " and "was widely hailed by publishers as being a fair advance which they could afford to pay without hardship to the publishing industry." Per contra, the Canadians felt that a march had been stolen on them. T h e second half of the year saw the market move definitely from the buyer's side to the seller's, and operators were pictured as being worried over how to keep production up to demand. 23 A l l signs pointed to a new boom in 1937, accompanied by many of the circumstances which had previously made boom periods the prelude to disaster. Last-quarter operations in 1936 had been at 91 per cent of capacity, only 2 per cent below the estimated maximum for the industry as a whole. In mid-February L o r d Rothermere cabled Canadian manufacturers: " H o p e your confreres fully recognize that the improvement in pulp and paper is only at the initial stage. From sources of information at my disposal, it is a certainty, barring a war, pulp and newsprint industries will, within two years, be confronting a shortage that may easily become permanent. There is now no room for weak-kneed negotiations for supplies to publishers or others except at prices much beyond those prevailing at the present moment . . . T h e newsprint

i68

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industry in particular is on the threshold of prosperity beyond anything it has experienced before." Charles Vining, President of the Newsprint Association of Canada, told the Canadian Club of Montreal on February 8 that money would soon be needed to provide new productive capacity for paper. C. L . Sibley, veteran Canadian correspondent of the Pafer Trade Journal, noted during the same month that "every newsprint unit in Canada which can be operated on an efficient basis . . . is working to capacity . . . The price trend is upward, and the market is rapidly developing symptoms of being a sellers' market, after being for seven lean years a buyers' market . . ." And on March 19 International announced a price increase of $7.50 ($50) per ton for 1938, to be followed promptly by most of the Canadian mills.24 Under these circumstances the Publishers' Association would normally have launched a full-dress offensive. Instead, it confined itself to a mildly hopeful statement that since the Great Northern had not yet announced its price, there was still a possibility of moderating Canadian demands. Together with this came a warning to eschew the new form of contract being offered, betokening renewed confidence on the part of the mills, abolishing the interlocking provisions which had been useful to the publishers by permitting one price-cutting mill to set the figure for large segments of the industry. In August a "recession" appeared and developed strength until in mid-October paper stocks broke badly on the Montreal Stock Exchange. A t almost the same moment the Great Northern announced a $48 price for 1938. A crisis impended. Would the Great Northern price break the market, or would the International, in combination with the smoothly cooperating provincial authorities, be able to maintain the $50 price? The general abandonment of the interlocking contract aided the Canadian producers, as did the firmly held provincial attitude opposed to price-cutting, and they persisted in

EFFORTS T O

COMBAT

DEPRESSION,

1929-1936

169

their price in the face of lessened consumption, large stocks on hand, and the momentarily unfavorable position of the industry. Instead of speeding production and engaging in a frenzied hunt for business to keep the wheels turning, the leading Canadian companies cut to a five-day week, tailoring production to probable demand. T h e $50 price was also maintained through 1939 and announced for 1940, in which year the Great Northern price went up to $49. In other words, intra-industrial co-operation, backed by governmental policy, had enabled the manufacturers to weather a period of economic difficulty which in other days would probably have enabled publishers' pressure to force prices down. 25 This practical example of the value of production control and political manipulation in flattening the curves of the business cycle left successive Presidents of the American Paper and Pulp Association pondering in their annual reports on the problem of the relation of the government to business. Frank J. Sensenbrenner announced in 1937 that "Industry quite generally seems to view with favor the business principles laid down in the National Industrial Recovery Act . . ." In the light of the boom of 1937 he concluded that "the [paper] industry appears to be moving irresistibly toward a catastrophe similar to that which occurred in the newsprint industry within the last ten years." T w o years later D . C. Everest presented to the Association its reply to a questionnaire sent to all trade associations requesting their opinion on questions of supply and demand: " w e have had ample proof in the paper industry that no matter how well the individual companies may be armed with facts concerning the economic status of the industry at any given moment, and their own relative importance in and dependence upon the industry trend, and no matter how farsighted their individual management may be, these individual company efforts are wholly inadequate to stem the occasional downward rush toward economic fatality.

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Nor can such individual action steady the seasonal and cyclical fluctuations in production which create instability to labor and capital. Neither of these phenomena benefit the public interest, and the Association experience over the years seems to indicate that a program rigorously restricted to the limitations of the Anti-trust Laws is not sufficient to protect the broad public interest that lies in an economically sound paper and pulp industry." With this contrast between Canadian practice and American wishful thinking this study may well close, before the abnormalities of another war period present other and more complex variables.26 The foregoing story has witnessed a shift from complete local supply of the market to a situation wherein the major portion of the commodity came from Canada. The development of policy has thus taken place under the impetus of increasing demand, faced by a relative decline in the native supply. It has been complicated by the alert desire of producers of Canadian wood, pulp, and paper (often financed extravagantly by American funds) to obtain for themselves an ever-increasing share of the profits accruing from the business; complicated, too, by the nature of Dominion-provincial relations which lodged control of forest resources largely in the hands of the latter. Against this shifting background the factor of supply and demand has been influenced further by domestic tariff policy, by occasional efforts of producers to tailor production so as to raise prices, by recurring periods of sudden heavy demand, and by subsequent entry of large increments of capital into the industry. The net result has been a series of pendulum swings which it has been the object of the foregoing account to examine. The narrative has indicated how successive periods (usually brief) of high prices have been followed in order by publishers' attacks upon manufacturers, by large capital investment, and by much longer periods of lowered prices. These sue-

EFFORTS TO COMBAT DEPRESSION,

1929-1936

171

cessive swings have for decades keyed publisher-manufacturer relations to a pitch of apparently permanent antagonism. This has arisen partly from the naturally competitive position of the two parties, partly from recurring crises which have aggravated this competition, and partly from policies deliberately adopted on both sides and inevitably exacerbating the "normal" hostility. Such developments as John Norris' crusade for free newsprint, for example, hardly inspired manufacturers to think well of publishers; by the same token, recurrent efforts to raise prices by combination drew no expressions of endearment from the opposite side of the fence. The practical problem of the future would seem to resemble that of the past: to maintain prices at a point where both interests may live at peace with fair profits. This happy solution has not hitherto been realized. The writer approached this study with slight knowledge and few preconceptions; he has pursued it as objectively as his capabilities permit. H e believes that both parties share the responsibility for failure to arrive at a solution. Discounting, however, manufacturers' desire for large dividends on occasionally swollen capital, it is his judgment that over the years the major responsibility for a lack of equilibrium should be laid at the door of the publishers, whose aggressive leadership and unique position for influencing public policy have given them striking advantages over the manufacturers. Some optimism for the future seems warranted, however. The later chapters of this account have indicated recurring periods of easier relationships, when intelligent understanding succeeded earlier bitterness. As these conclusions are set down, informed leaders of both groups have indicated belief that a live-andlet-live attitude seems to be developing. If the foregoing story possesses any utilitarian value aside from its exposition of historical developments, it should be as a signpost pointing hopefully in that direction.

NOTES CHAPTER

I

1. Tarif Hearings before the Committee on Ways and Means, First Session, Fifty-Third Congress (Washington, 1 8 9 3 ) , House Miscellaneous Document 43, 53d Congress, ist Session, pp. 1047—49; Notes on Tarif Revision, Prepared for the Use of the Committee on Ways and Means of the House of Representatives (Washington, 1 9 0 9 ) , House Document 1 5 0 3 , 60th Congress, 2d Session, p. 524. The Paper Trade Journal (New York and Chicago, 1 8 7 2 ff.), L X I I (March 23, 1 9 1 6 ff.), carries a series of articles covering the history of paper making in the United States. (Volumes I—XXXVIII inclusive are paged consecutively; subsequent volumes page each issue. Citations will be by date and page through volume X X X V I I I , by date only in case of later volumes.) 2. Pulp and Paper Investigation Hearings (6 vol.; Washington, 1 9 0 9 ) , House Document 1 5 0 2 , 60th Congress, 2d Session, pp. 1093— 95 ; Reciprocity with Canada: Hearings before the Committee on Finance of the United States Senate Sixty-Second Congress on H. R. 4412 An Act to Promote Reciprocal Trade Relations with the Dominion of Canada and for Other Purposes (Washington, 1 9 1 1 ) , Senate Document 56, 6 î d Congress, ist Session, pp. 1097—99; Tarif Information Surveys on the Articles in Paragraph 322 of the Tarif Act of 1Ç13 and Related Articles in Other Paragraphs (Washington, 1 9 2 1 ) , pp. 15—17; United States Tarif Comission: Summary of Tarif Information, 192Ç, on Tarif Act of 1Q22 (Washington, 1 9 2 9 ) , p. 2 4 3 9 ; George A. Prochaska, J r . , The Pulp and Paper Industry (Typewritten: Washington, n.d.), Records of the National Recovery Administration, T h e National Archives, pp. 18—21, 44—5; R. S. Kellogg, The Story of News Print Paper (New York: News Print Service Bureau, 1 9 3 6 ) , pp. 5—21. 3. T h e matter was stated succinctly by M r . R . S. Kellogg, one of the veteran observers of the newsprint scene, when he wrote: " T h e publisher must get his white paper at a price which, taken with all his other production costs, totals enough less than his receipts from circulation and advertising so that he can profitably continue in the publishing business . . . T h e newsprint maker must sell his products for a price that will not only pay his direct out-of-pocket cost, but which will also adequately provide for maintenance of raw material supply, depreciation 172

NOTES

I73

of plant and obsolescence of equipment in addition to return for the use of capital. If he fails for long to get such a price, he ceases to be a paper manufacturer . . . " (Quoted in Paper Trade Journal, C I I I (Nov. 12, 1936).) CHAPTER

II

1 . Daily papers published in the United States increased from 9 7 1 to 2 , 2 2 6 between 1 8 8 0 and 1 9 0 0 , and weeklies and semiweeklies from under nine thousand to almost fourteen thousand. Arthur Meier Schles( N e w York: Macmillan, inger, The Rise of the City, 1878-1898 I933)>P-I852. T h e name was changed in 1 8 8 3 to the American Paper Manufacturers' Association, and again in 1 8 9 7 to the American Paper and Pulp Association in order to admit pulp manufacturers to membership. Paper Trade Journal, X X V I (October 1 6 , 1 8 9 7 ) , pp. 4 9 - 5 1 ; E . R . Jones, Paper Industry Study (Typewritten: Washington, 1 9 3 6 ) , Records of the National Recovery Administration, T h e National Archives, pp. 360-62. 3. Some emphasis on this early effort to balance production and consumption may not be amiss in view of the later insistence of its leaders upon the purely social character of the Association. T h e difficulties of the manufacturers are pointed up by the fact that Canada was made a "slaughter market" in 1 8 7 8 , as indicated by Canadian complaints a decade later. Paper Trade Journal, X V I (April 2, 1 8 8 7 ) , p. 1 8 7 . 4. Ibid., I X (Jan. 3, 1 8 8 0 ) , p. I , (Feb. 2 1 , 1 8 8 0 ) , p. 5 7 ; The New York Times ( N e w York, 1 8 5 1 ff.), Mar. 1 3 , 1 8 8 0 . T h e boom lasted from September, 1 8 7 9 to J u l y , 1 8 8 0 . On the influence of the boom in stimulating new production, cf. Paper Trade Journal, X X X (Feb. 1 5 , 1 9 0 0 , Supplement), p. 4. 5. The Congressional Globe (Washington, 1 8 3 3 f f . ) , 46th Congress, 2d Session, pp. 6 5 3 , 7 6 5 , 1 0 4 3 , 1 0 6 2 , 1 2 3 0 , 1 2 3 1 , 1 2 3 4 , 1 3 8 5 , 1 3 8 6 . 6. Paper Trade Journal, I X (Feb. 2 1 , 1 8 8 0 ) , p. 5 7 ; N . Y . Times, Mar. 1 3 , 1880. 7. United States tariff legislation is conveniently collected in Tariff Acts Passed by the Congress of the United States from 1789 to 1897, Including All Acts, Resolutions, and Proclamations Modifying or Changing Those Acts (Washington, 1 8 9 8 ) , House Document 5 6 2 , 55th Congress, 2d Session. 8. Boutwell's ruling

is found in Synopsis

of

Sundry

Decisions

PRINT

174 Rendered Acts,

by the

During

Treasury

the

Year

Department

Ending

9. N .

Y.

Times,

Mar.

Malone, editors, Dictionary

13,

under

December

1 8 7 3 ) , p. 2 1 5 . C f . also N . Y . Times, 14,

PAPER

31,

the

PENDULUM

Tariff

1872

and

Other

(Washington,

M a r . 8, 9, 1 3 , 1880. 1 8 8 0 ; Allen Johnson & Dumas

of American

Biography

(21

vol.;

New

Y o r k : Scribne'r's, 1 9 2 8 — 1 9 4 4 ) , X I I , p. 6 4 1 . A n inveterate raconteur, M i l l e r retold the story of his appearance before the committee many times, with an airy disregard for dates but w i t h sufficient detail to establish his importance in the episode. C f . The Paper World and Springfield, Mass.,

i88off.),

IX

(Aug.,

(Holyoke

1888). This

monthly

journal paged each issue separately. Citations will be by volume and month. Paper Trade Journal, X X V I I (Feb. 19, 1 8 9 8 ) , p. 1 7 2 . 10. It might be noted parenthetically that this was one of the f e w clear-cut victories w o n by the manufacturers at congressional hands. N . Y . Times,

M a r . 10, 1 7 , 24, 25, 26, 3 1 , A p r . 6, 14, 16, 23, 24, 29,

M a y 2, 14, 1 8 8 0 ; Paper Trade Journal,

I X ( M a r . 13, 1 8 8 0 ) , p. 84,

( M a r . 20, 1 8 8 0 ) , p. 92, ( M a r . 27, 1 8 8 0 ) , p. 100, ( A p r . 1 7 , 1 8 8 0 ) , p. 1 2 4 . James A . Garfield, an opponent of the W o o d bill, claimed to have received five thousand copies of newspapers containing an editorial blast circularized to the country press supporting W o o d ' s proposal. 11.

Paper Trade Journal, X X V I ( O c t . 1 6 , 1 8 9 7 ) , pp. 51—3.

1 2 . Ibid.,

X V I I I ( A u g . 3, 1 8 8 9 ) , p. 603.

1 3 . Ibid.,

X X I I I (Jan. 6, 1 8 9 4 ) , p. 3 ; X X I V ( M a r . 30, 1 8 9 5 ) , p.

3 2 2 , X X V (Jan. 4, 1 8 9 6 ) , p. 5 ; American sociation,

Committee

on Paper,

Bulletin

Newspaper 326, M a y

Publisher? 11,

1895.

AsThe

Association publishes several series of bulletins on different matters of interest to its members. Material on newsprint is likely to appear in any of them. Since all the bulletins are numbered consecutively, without regard to series, it seems simplest to cite by number, date, and page w h e n page is given. 14. Paper Trade Journal, X X V (Dec. 5, 1 8 9 6 ) , p. IOOO. 1 5 . Ibid.,

X I ( D e c . 2, 1 8 8 2 ) , p. 585. T h e C i v i l W a r opened with

newsprint dutied at 30 per cent ad valorem under the A c t of M a r c h 3, 1 8 6 3 , w h i c h also introduced the classification of " u n s i z e d "

printing

paper, w h i c h included newsprint. T h i s level of duty was maintained through successive revisions until that of 1 8 8 3 . House 5 5 t h Congress, 2d Session, passim-, Globe,

Document

562,

4 2 d Congress, 2d Session,

pp. 3 5 1 1 , 3908—11. Newsprint was excepted from the 10 per cent horizontal reduction of 1 8 7 2 , 1 6 . House Document

5 6 2 , 5 5 t h Congress, 2d Session, pp. 2 9 7 , 307—

NOTES

I75

8; Pafer World, V I I I (Feb., 1 8 8 7 ) , I X (Aug., 1 8 8 8 ) ; Tariff Hearings before the Committee on Ways and Means, Second Session, FiftyFourth Congress, House Document 338 (2 vol.; Washington, 1 8 9 7 ) , p. 1 7 6 4 . Reminiscing of 1 8 8 3 before the Dingley hearings of 1896, he quoted himself as having said: " w e do not care to have any more protection, so as to avoid friction between the newspaper publishers and the paper manufacturers." 1 7 . Pafer Trade Journal, X V I I (Mar. 3, 1 8 8 8 ) , p. 1 4 8 , (June 30, 1 8 8 8 ) , p. 456, (July 28, 1 8 8 8 ) , p. 5 3 3 , X X V I (Oct. 1 6 , 1 8 9 7 ) , p. 5 3 ; The Congressional Record (Washington, 1 8 7 4 6 . ) , 50th Congress, 1st Session, p. 9 2 7 6 ; ibid., 2d Session, p. 698. T h e restoration of the duty on pulp seems to have been due to the effort of those interested in chemical pulp; the Act of 1 8 8 3 made no distinction between the two types. 1 8 . Pafer Trade Journal, X I X (Jan. 1 1 , 1 8 9 0 ) , p. 30, (Mar. 1 5 , 1 8 9 0 ) , p. 2 3 0 ; Revision of the Tariff: Hearings before the Committee on Ways and Means, Fifty-First Congress, First Session, 1889—1890 (Washington, 1 8 9 0 ) , House Miscellaneous Document 1 7 6 , pp. 717—26; To Reduce the Revenue and Equalize Duties on Imforts, and for Other Pur-poses, House Report 1466, 51st Congress, 1st Session (April 1 6 , 1 8 9 0 ) , p. 1 2 . Little mechanical pulp was being imported at this time because the low prices resulting from sharp domestic competition made importation unprofitable. 19. While the bill was pending before the Senate, Warner Miller told the annual convention of the paper manufacturers that " w e have undoubtedly a productive capacity of from 3 3 ^ to 50 per cent above the actual consuming power of the country . . ." Pafer Trade Journal, X X I I I (July 28, 1 8 9 4 ) , pp. 707, 7 1 0 . 20. Ibid., p. 7 0 0 ; N . Y . Times, June 1 9 , 1 8 9 4 ; Record, 53d Congress, 2d Session, pp. 6440—42; Replies to Tariff Inquiries'. Schedule M. Pulf, Pafers, and Books. Bulletin No. 54, Part II. Committee on Finance, United States Senate. Senate Refort 5 1 3 , 53d Congress, 2d Session (July 1 0 , 1 8 9 4 ) , pp. 11—30. T h e publishers' association mildly counselled its membership to write to Washington in an effort to secure removal of the wood-pulp duty, but did not exert itself unduly in this direction. A.N.P.A. Bulletin No. 2 3 7 (Jan. 4, 1 8 9 4 ) . CHAPTER

III

I. Pafer Trade Journal, X X V I (Jan. 2, 1 8 9 7 ) , p. 8. T h e y seem to have contemplated asking for an increase from $ 1 . 2 0 to $ 1 . 6 7 per ton

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1502, 60th Congress, 2d Session,

P- 132. Pafer Trade Journal, X X V I (Jan. 9, 1 8 9 7 ) , p. 28; House

Docu-

ment 338, 54th Congress, 2d Session, pp. 1753—67, carries the committee hearings on the newsprint aspects of the Dingley Bill. Lengthy examination of Norris' career leaves the author unable to be categorical about his motivation. It appears to be compounded of low-tariff sentiment, a very practical desire to secure cheap newsprint for his employers, the World

and later the Times,

and on occasion not entirely devoid of

straight vindictiveness. At this stage of the story, despite his insistence that he spoke only for himself, he may have had one eye on Joseph Pulitzer, his publisher, who was credited by a shrewd observer of the newspaper scene as having done "more to injure the news paper manufacturing business than any other publisher in this country, by the methods he forced upon the manufacturers whenever he called for bids on his big contract for white paper. " E v e r y time this contract was renewed by the manufacturer Pulitzer would make a lot of new conditions that would have to be accepted by the manufacturer before he could receive the contract. T h e World contract . . . was the prime factor in driving down the price of paper every year much faster than the manufacturers were able to cheapen the cost of production. T h e upshot of it all was that M r . Pulitzer simply secured his white paper away below cost of manufacturing, and of course the other large publishers were compelled to demand the same low rates . . . " T h e same observer also quoted Norris as asserting that "he didn't give a continental darn what the price of news paper was, or what it would ever be, so long as the N e w York World purchased its paper cheaper than any other publisher in N e w Y o r k . " The Pafer Mill

and Wood Pulf

News

( N e w York, 1876 ff.), X X I I I (Apr. 14, 1 8 9 8 ) , X X I V (Oct. 19, 1 8 9 9 ) . Cited subsequently as Paper

Mill.

3. T h e Association was founded in 1887 and had from time to time manifested a desultory interest in the newsprint problem, without making it a major issue. Its incorporation in 1897 and the injection of the Norris drive placed it in a position to become an aggressive factor. Refort of Proceedings of the Eleventh Newsfafer

Publishers'

York, February i6th,

Annual Convention

Association Held ijth

of the

American

at the Waldorf-Astoria,

and 18th, 189J

New

( N e w York, 1888 f f . ) , pp.

41—2. Printed under various titles, these annual reports are bound together in the office of the Association. Cited subsequently as A . N . P . A . Refort,

1897, etc. T h e Association's articles of incorporation (Feb. 19,

I77

NOTES 1 8 9 7 ) are printed in Senate Document

56, 62c! Congress, 1st Session,

pp. 1 1 4 1 - 2 . 4. A leading article in the Paper

Trade

Journal,

XXVI

( M a r . 6,

1 8 9 7 ) , p. 185, rehearsed the evil plight to w h i c h the industry had been brought by overproduction and discounted the wisdom of competitive prices and cultivation of the export trade as remedies, insisting that curtailment of output (i.e., combination) was the most desirable plan. 5. M a r c h 3 1 . Record,

55th Congress, 1st Session, p. 5 5 7 .

6. In addition to Norris' comment, above, cf. Paper Trade

Journal,

X X I V (Dec. 28, 1 8 9 5 ) , p. 1 1 7 4 , X X V ( N o v . 28, 1 8 9 6 ) , p. 980. 7. Ibid.,

X X I I ( A p r . 29, 1 8 9 3 ) , p. 3 7 4 , X X V , passim.

8. Ibid.,

X X V I ( A p r . 10, 1 8 9 7 ) , p. 2 9 5 , ( M a y 1, 1 8 9 7 ) , pp. 3 5 2 ,

3 5 8 ; Joan V . M . Foster, "Reciprocity and the Joint H i g h Commission of 1898—9," The Canadian Historical Meeting

Held

at Montreal

May

Association:

25—26,

1939,

Report of the

Annual

with Historical

Papers

( T o r o n t o : University of T o r o n t o Press, 1 9 3 9 , pp. 87—98), pp. 87—8; L . Ethan Ellis, Reciprocity

1911:

A Study in Canadian-American

Relations

( N e w H a v e n : Yale University Press, 1 9 3 9 ) , p. 5. 9. Laurier was still standing firm, as far as public information went, as late as M a y 2 1 ; the shift took place before June 8. Paper Trade nal, XXVI 10. Ibid.

(June 26, 1 8 9 7 ) , p. 508.

1 1 . O n the subsequent story see Record, pp. 1 8 6 4 - 5 , Document

Jour-

( M a y 22, 1 8 9 7 ) , p. 4 1 7 , (June 6, 1 9 1 0 ) , pp. 492, 498.

2+99;

55th Congress, 1st Session,

2702, 2705, 2709, 2 7 8 0 - 3 , 2 7 8 7 , 2 9 0 9 - 1 0 ;

1 5 0 2 , 60th Congress, 2d Session, pp. 4 7 5 — 9 ; N . Y .

House Times,

July 22, 1 8 9 7 . 1 2 . In a debate in the House on M a r c h 4, 1908, Gilbert M . H i t c h cock, then a Representative from Nebraska, made the statements summarized in this sentence, basing them on his own experience as a publisher in Omaha and upon the testimony of Norris, M i l l e r , and Russell in the D i n g l e y hearings. Sereno E . Payne and John Dalzell, in reply, tried to show that the average price in 1 8 9 7 was $2.00 per hundredweight. ord, 60th Congress, 1st Session, pp. 2906—7. C f . also House

Rec-

Document

1 5 0 2 , 60th Congress, 2d Session, p. 1 5 . 13. Record,

5 5 t h Congress, 1st Session, p. 2 7 8 1 . H e also stated that

the suggestion for the retaliatory proviso on paper was made to the committee by the House managers. T h e proceedings of the committee were not bound or preserved. 14. T h e r e

is surprisingly little evidence of A . N . P . A .

activity

in

connection with this legislation. Its paper committee issued at least one

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appeal to publishers to urge their Congressmen to put groundwood on the free list. Pafer Trade Journal, X X V I (Apr. 24, 1 8 9 7 ) , p. 332. 1 5 . Statements of Vice-President G . C . Sherman to the annual convention of the American Paper and Pulp Association, Feb. 16, 1898. Ibid., X X V I I (Feb. 19, 1 8 9 8 ) , p. 1 4 3 ; Pafer Mill, X X I I (Apr. 14, 1898). 16. Pafer Mill, XXIII (Feb. 3, 1898) ; Pafer Trade Journal, X X V I (Sept. 4, 1 8 9 7 ) , p. 705, X X V I I (Jan. 1, 1 8 9 8 ) , p. 4, (Feb. 5, 1 8 9 8 ) , pp. 1 0 1 , 104, 123 ( T h e World comment is reprinted in this issue), X L V I (Feb. 6, 1 9 0 8 ) ; United States Tariff Commission: Tariff Information Surveys on the Articles in Paragrafh 322 of the Tariff Act of 1913 and Related Articles in Other Paragrafhs: Printing Pafer (Washington, 1 9 2 3 ) , pp. 12—3. Cited subsequently as U . S. Tariff Commission, Tariff Information, 1923. 1 7 . It should be noted that the trade journals speak quite matter-offactly about trusts and combinations among the various branches of the business at this period. 18. A . N . P . A . Refort, 1898, pp. 3 4 - 5 . Norris was again made chairman. From the tone of Bryant's remarks it would appear that the meeting was a sincere attempt to conciliate the publishers. Warner Miller's statement to the mid-winter meeting of the Paper and Pulp Association a few days earlier was couched in firm language, but not excessive in its demands: "gentlemen, all we ask is for a six per cent dividend, and we are going to have it . . . that is something we have never e n j o y e d . " Pafer Mill, X X I I I (Feb. 17, 1 8 9 8 ) . 19. Pafer Trade Journal, X X V I I ( M a y 7, 1 8 9 8 ) , p. 3 7 7 ; Mill, X X I I I , fassim.

Pafer

20. Pafer Mill, X X I I I (July-Sept., 1 8 9 8 ) , fassim, especially Aug. 1 1 , 1898. 2 1 . Ibid., Sept. 22, 1898. 22. Ibid., Dec. 15, 1898. 23. N . Y . Times, Sept. 2, 1 8 9 8 ; Pafer Mill, X X I V (Jan. 26, 1 8 9 9 ) , (Feb. 2, 1 8 9 9 ) ; Pafer Trade Journal, X X V I I (Dec. 24, 1 8 9 8 ) , pp. 1038, 1 0 4 2 ; A . N . P . A . Refort, 1899, pp. 8 - 9 . Norris' first two briefs and Miller's statement of January 7, 1899, are reprinted in House Document 1502, 60th Congress, 2d Session, pp. 746—8, 1221—5, 1258 ff. In view of oft-repeated charges that the International had taken in obsolete mills, as frequently denied by its spokesmen, the following contemporary comment is of some interest: " w e must also admit that there were hulks among the news paper mills, and that was one reason why the

NOTES

179

news paper manufacturers were so long in bringing about the news paper syndicate . . . " Pafer Mill, X X I I I (Dec. 1, 1 8 9 8 ) . 24. Pafer Trade Journal, X X I X (Nov. 23, 1 8 9 9 ) , p. 820, X L V I (Feb. 6, 1 9 0 8 ) . 25. Ibid., X X I X (July 13, 1 8 9 9 ) , p. 199, (July 20, 1 8 9 9 ) , p. 244, (Nov. 9, 1 8 9 9 ) , p. 764, (Dec. 7, 1 8 9 9 ) , p. 8 7 4 ; Pafer Mill, X X I V (July 6, Sept. 2 1 , Dec. 7, 1 8 9 9 ) . 26. By autumn the Great Northern Paper Co., a new organization not affiliated with the trust, was offering inducements to buyers in order to break into the field. T h e new competition introduced by it and by other newcomers broke the temporary price control of the International and inaugurated another period of declining prices lasting into 1906. Pafer Trade Journal, X X I X (Sept. 7, 1 8 9 9 ) , p. 458, X X X (Feb. 8, 1900), pp. 1 6 7 , 178, 180, (Feb. 22, 1 9 0 0 ) , p. 244, X X X I (Oct. 18, 1900), p. 485, X L V I (Feb. 6, 1 9 0 8 ) ; A . N . P . A . Bulletin, N o . 692 (Jan. 1 5 , 1900), pp. 7 - 8 ; A . N . P . A . Refort, 1900, pp. 9 - 2 6 ; NewsPrint Pafer Industry. Letter from the Federal Trade Commission Transmitting Pursuant to a Senate Resolution of Afril 24, 1916, the Final Refort of the Commission Relative to the News-Print Pafer Industry in the United States, Senate Document 49, 65th Congress, ist Session (June 3, 1 9 1 7 ) , pp. 2 3 - 4 . 27. Pafer Trade Journal, X X X (June 7, 1 9 0 0 ) , p. 7 1 5 , X L V I (Feb. 6, 1 9 0 8 ) ; Light on the Print Pafer Situation. Being an Address Delivered by Lincoln B. Palmer . . . before the New York Associated Dailies at Albany, New York, January 23, 1917 (pamphlet; N e w York: A . N . P . A . , 1 9 1 7 ) , p. 5. T h e trade journals are filled with talk of combination in all fields of the industry between 1900 and 1902. 28. It should be noted that the lands held in fee could still export pulpwood; the ratio between fee and Crown lands varied widely from Province to Province. T h e prohibition was announced early in the year, to take effect on M a y 1, 1900. Pafer Trade Journal, XXX (Jan. 18, 1900), pp. 7 1 , 84, (Feb. 15, 1900), Supplement, p. 7 ; Recifrocity with Canada'. Comfilation of ign, Senate Document 80, 6 i d Congress, ist Session, pp. 4915—9, prints the Canadian provincial legislation in full. 29. Pafer (May (Apr. 1502,

Senate Document 49, 65th Congress, ist Session, pp. 23—4; Trade Journal, X X X I I (Apr. 18, 1 9 0 1 ) , pp. 485, 496, 502, 23, 1 9 0 1 ) , pp. 6 4 5 - 6 , X X X V I I I (Feb. 18, 1 9 0 4 ) , pp. 2 8 3 - 4 , 2 1 , 1 9 0 4 ) , p. 576, X L (Feb. 9, 1 9 0 5 ) , p. 7 9 ; House Document 60th Congress, 2d Session, pp. 1242, 1247—54, 1298. An inter-

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view with Chisholm appearing in The Brooklyn 2, 1902, amplified his views. Ibid., pp. 1225—7.

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Daily Eagle,

April

30. A . N . P . A . Report, 1904, pp. 3 0 - 6 . A resolution authorized acceptance of contributions up to one hundred thousand dollars for a war chest. T h e Lilley Resolution was never passed, but the Judiciary Committee to which it was referred held hearings on April 5 and 13 which elicited considerable information. T h e hearings do not appear in the documents of the 5 8th Congress, but are printed in the M a n n Committee hearings of 1908, House Document 1502, 60th Congress, 2d Session, pp. 1229—1302. Prior to introduction of the Lilley Resolution the publishers had asked Payne for a hearing on removal of the wood-pulp tariff and had been rebuffed. Shortly before the April hearings Edward Rosewater, a publisher of Omaha, Nebraska, handed President T h e o dore Roosevelt a memorandum urging investigation of the trust by the Department of Commerce and Labor, and prosecution if the information so gathered should warrant action. Roosevelt's reception of this overture was said not to be "thoroughly sympathetic . . . " N . Y . Times, Mar. 8, 1 9 0 4 ; House Document 1502, pp. 1 2 4 5 - 6 . For a sketch of Ridder, cf. Dictionary of American Biography, X V , pp. 5 9 0 - 1 . 3 1 . Lilley seems to have introduced his resolution, modeled after a previous one attacking the beef trust, without consulting the A . N . P . A . , and as the result of a local situation. 32. A . N . P . A . Report, 1905, p. 38; Taper Trade Journal, X X X V I I I (Apr. 28, 1 9 0 4 ) , p. 603, X X X I X (Sept. 29, 1904) (beginning with Volume X X X I X , July, 1904 ff., this journal is paged by issues instead of continuously for the year as previously. It will subsequently be cited by volume and date), (Dec. 29, 1 9 0 4 ) . An account of this prosecution, the details of which do not forward the present story, will be found in David Bryn-Jones, Frank B. Kellogg: A Biography ( N e w York: G . P. Putnam's Sons, 1 9 3 7 ) , pp. 45—8. 33. House Document 1502, 60th Congress, 2d Session, pp. 699— 700; Paper Trade Journal, X L I (Dec. 7, 1 9 0 5 ) , X L I I (Jan. 4, 1 9 0 6 ) , X L I I I (Dec. 13, 1 9 0 6 ) , X L V I (Feb. 6, 1 9 0 8 ) . An official of the International testified that average gross receipts per ton of sales dropped from $42.52 in 1901 to $39.90 in 1906. Senate Document 49, 65th Congress, 1st Session, p. 24. 34. T h o u g h the shortage was acute by M a y and continued during the summer, the price held steady during the first half of the year. House Document 1502, 60th Congress, 2d Session, pp. 248, 2 9 8 1 ; Paper Trade Journal, X L I V ( M a y 16, 1 9 0 7 ) , X L V (Dec. 5, 1 9 0 7 ) .

NOTES

l8l

T h e shortage was aggravated by low water and strikes, designed to induce the mills to adopt the three-tour (shift) system. Ibid., fassim. 35. Pafer Trade Journal, X L I V (Feb. 7, 1907) and •fassim, X L V (July 18, 1907) and fassim, X L V I (Jan. 2, Feb. 6, 1 9 0 8 ) ; House Document 1502, 60th Congress, 2d Session, pp. 1733, 2969—81; Senate Document 56, 52d Congress, 1st Session, p. 1 1 6 0 ; Palmer, of. cit., p. 6 ; Tariff Hearings before the Committee on Ways and Means of the House of Refresentatives, Sixtieth Congress, 1908-1909, House Document 1505, 60th Congress, 2d Session (9 vols., paged continuously: Washington, 1909), p. 5914. 36. House Document 1502, 60th Congress, 2d Session, pp. 1026—30, 1078-98, 1 1 4 0 - 1 . 37. Ibid., pp. 1 7 1 - 2 ; Pafer Trade Journal, X L V (Sept. 12, 1 9 0 7 ) ; New-York Tribune (New York, 1841 ff.), Sept. 19, 1907. 38. A letter from Ridder's paper manufacturer seems to show, however, that the Staats-Zeitung contract had not been closed as late as October 2. House Document 1502, 60th Congress, 2d Session, pp. 1966—7. Ridder's account is in Senate Document 56, 62nd Congress, 1st Session, p. 1261. 39. The Fourth Estate, X I V (New York, 1 8 9 4 5 . ) , (Sept. 14, 21, 28, Oct. 5, Nov. 2, 1 9 0 7 ) . Norris' proposals contained instructions to a paper committee enlarged from three to nine to enlighten the President and Congress in order: "First, that the authority of existing statutes for repression of trade combinations may be invoked; "Second, that the defiance of recent judicial action prohibiting participation in such a combination by certain Western mills may be punished, and " T h i r d , that the President may be put in possession of information which shall equip him to advise Congress of the abuse of its tariff favors by papermakers." As a final directive a resolution declared " T h a t it is the sense of this meeting that the duty on printing paper, wood pulp and all material entering into the manufacture of printing paper should be repealed." A.N.P.A. Refort, 1908, Affendix, pp. 80-94. T h e greater emphasis on the tariff approach may have been due to an earlier statement of Attorney General Charles J. Bonaparte that the Department of Justice was already involved in seven anti-trust cases. Memorandum of an interview in the summer of 1907, Pafer Trade Journal, X L V I (Mar. 5, 1908). For further comment, cf. ibid., X L V

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(Sept. 19, 26, 1 9 0 7 ) . One observer pointed out that the Dingley tariff, in effect since 1897, had not prevented fluctuations in the price of paper, concluding rather perspicaciously that "the tariff is only remotely, if at all, the cause of the present high price of print paper." 40. T o John Norris, November 13, 1907, printed in Record, 60th Congress, 1st Session, p. 2986. T h e evidence thus requested went to Bonaparte February 10, 1908, but was not sent to publishers until March 4. 4 1 . Paper Trade Journal, X L V I (Mar. 5, 1 9 0 8 ) ; N . Y . Tribune, Nov. 8, 1 9 0 7 ; Fourth Estate, X I V (Nov. 16, 1 9 0 7 ) ; House Document 1502, 60th Congress, 2d Session, pp. 1323—4. 42. Roosevelt's rapid retrenchment and shift to conservation may be explained by pressure from the American Paper and Pulp Association, by the advice of Chief Forester Gifford Pinchot, by his innate political sagacity, or by a combination of these factors. By November 11 he was writing to David S. Cowles, head of the A.P.P.A.: " I am very firmly of the belief that wood pulp and forest products should not pay any duty. Our supply of timber is being exhausted altogether too rapidly in this country, and the exhaustion should be checked in every possible way instead of stimulated . . . " Theodore Roosevelt Papers ( T h e Library of Congress). T w o days later he wrote Senator William P. Frye of Maine in similar vein. Ibid. T h e implications of the message regarding future American inroads upon their raw materials were not lost upon Canadians. For text of the message and editorial comment, cf. Record, 60th Congress, 1st Session, pp. 76, 1 6 3 1 ; Pafer Trade Journal, X L V (Nov. 14, Dec. 5, 1 9 0 7 ) , X L V I (Jan. 2, 1 9 0 8 ) , X L V I I (Nov. 5, 1 9 0 8 ) ; Fourth Estate, X I V (Nov. 16, 23, Dec. 7, 1 9 0 7 ) .

CHAPTER

IV

1. T h e six volumes of the Mann Committee hearings, House Document 1502, 60th Congress, 2d Session, have found frequent place in documenting earlier chapters. T h e y delved into all phases of production and consumption, and their compilation made Chairman James R . M a n n the recognized congressional authority on the paper question for the next decade. For a sketch of Mann, one of the most useful legislators of his generation, cf. Dictionary of American Biography, X I I , p. 244. 2. According to Norris this information had been submitted in October, 1 9 0 7 ; it was circularized to the publishers under date of March 4,

NOTES

183

1908, and read into The Congressional Record (60th Congress, 1st Session, pp. 2 9 8 6 - 7 ) on March 6. House Document 1 5 0 5 , 60th Congress, 2d Session, p. 5 9 1 7 . It was answered seriatim by Albert H . Walker in Paper Trade Journal, X L V I (Mar. 12, 1 9 0 8 ) . Ridder was by this time President of the A . N . P . A . 3. House Document 1502, 60th Congress, 2d Session, p. 2 1 1 ; A . N . P . A . Bulletin, N o . 1788 (Mar. 7, 1908), pp. 1 2 1 - 2 , 1793 (Mar. 16, 1 9 0 8 ) , pp. 1 3 9 - 5 2 . 4. Record, 60th Congress, 1st Session, pp. 2850, 3854; Fourth Estate, X V (Mar. 28, 1 9 0 8 ) ; A . N . P . A . Report, 1908, p. 68. Canadian reaction was vigorous. A Canadian publisher told his colleagues in the A . N . P . A . that Roosevelt's message was "one of the most ludicrous statements that was ever put forth by any President or monarch" with its suggestion that Canadian forests should be devastated while those below the border recuperated from recent overcutting. Ibid., pp. 66—J. T h e pulp and paper section of the Canadian Manufacturers' Association urged immediate prohibition of pulpwood exports in case the United States removed the duty on pulp. House Document 1502, 60th Congress, 2d Session, pp. 1602—3. 5. N . Y . Tribune, Apr. 3, 1908; Record, 60th Congress, 1st Session, pp. 4338, 4512—3; Letter jrom the Attorney-General, Transmitting a Response to the Inquiry of the House as to Whether or not any Proceedings Have Been Taken to Prosecute the International Paper Company or Related Corporations for Alleged Violations of Federal Law, House Document 860, 60th Congress, 1st Session, pp. 1—2; Letter from the Secretary of Commerce and Labor, Transmitting a Response to the Inquiry of the House as to Investigations into the Management of thè International Paper Company and other Corporations, House Document 867, 60th Congress, 1st Session, p. 1. T h e President indicated his sympathetic interest in the inquiry by instructing Bonaparte to start preparing his reply several days before the resolution was passed. (Letter to Bonaparte, Apr. 3, 1908; Roosevelt Papers.) 6. Paper Trade Journal, X L V I (Apr. 23, 1908). T h e manufacturers were in Washington in force by this time, denying monopoly and insisting that prices had gone up much less than costs. T h e A . P . P . A . had meantime circularized its membership urging counterpressure on Congress lest the duty be repealed in spite of Cannon's efforts. Ibid. 7. A . N . P . A . Report, 1908, p. 20; Record, 60th Congress, 1st Session, pp. 4976, 4994, 5024—33, 66th Congress, 2d Session, p. 4342. 8. A . N . P . A . Report,

1908, pp. 2 1 - 5 , 6 1 — 7 1 ; Senate Document

56,

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62d Congress, 1st Session, pp. 1225—6; Paper Trade Journal, (Apr. 23, 1 9 0 8 ) .

XLVI

9. House Document 1502, 60th Congress, 1st Session, pp. 222—3, 832; Pulf and Pafer Investigation, House Re fort 1786, 60th Congress, 1st Session, pp. I—18; Record, ibid., p. 7 1 5 3 ; Fourth Estate, X V (June 6, 1908), (Oct. 17, 1 9 0 8 ) ; House Document 1505, 60th Congress, 2d Session, p. 5900; House Document 562, 55 th Congress, 2d Session, p. 553. Norris supported this reciprocity proposal in the autumn of 1908. 10. House Document 1502, 60th Congress, 2d Session, pp. 2018—22; Pafer Trade Journal, X L V I (June 18, 1 9 0 8 ) , X L V I I (July 2, 1 9 0 8 ) . T h i s journal asserted that his salary was underwritten by Adolph Ochs, Victor Lawson, Medill McCormick, Seitz, and Ridder, all publishers of metropolitan journals. Ridder's proposal called for contributions according to tonnage of newsprint consumed. 1 1 . House Document 1502, 60th Congress, 2d Session, pp. 2028— 30; Fourth Estate, X V (July 4, 1 9 0 8 ) . Bryan successfully resisted the manufacturers' request to oppose a free paper plank. A . N . P . A . Bulletin, No. 1851 (July 24, 1908), pp. 4 0 6 - 7 . 12. It should be noted that the A.P.P.A. included all branches of the industry, including news. Pafer Trade Journal, X L V I (Feb. 6, 1 9 0 8 ) , X L V I I (July 30, Oct. 7, 1 9 0 8 ) ; Senate Document 56, 62d Congress, 1st Session, pp. 1023—5. 13. House Document 1502, 60th Congress, 2d Session, p. 3. Reference has already been made to this voluminous record. In the following account reference is to these volumes unless otherwise indicated, and page citations will be held to a minimum. 14. Ibid., p. 38. 15. Ibid., pp. 1 3 4 8 - 5 0 . 16. Mann wrote in mid-July that though the majority of publishers were not sufficiently interested to reply, probably most of those seriously affected by increased paper costs had done so. Ibid., pp. 2023—5. 1 7 . Ibid., p. 818. T h e facts bear out trade journal charges of reluctance of publishers to appear. Pafer Trade Journal, X L V I ( M a y 7, 2 1 , 28, 1 9 0 8 ) . A request for information sent to 931 manufacturers brought 1 7 2 returns, representing 220 plants. 18. Fourth Estate, X V (June 27, 1 9 0 8 ) ; Pafer Trade Journal, X L V I , June 4, 1 9 0 8 ) ; House Document 1502, 60th Congress, 2d Session, pp. 1 3 0 3 - 3 2 , 1 5 5 7 - 8 . 19. House Refort

1786, 60th Congress, 1st Session, pp. I—18.

20. Pafer Trade Journal, X L V I I (Nov. 26, 1 9 0 8 ) ; N . Y .

Tribune,

NOTES

i8

5

Nov. 22, 1908; Fourth Estate, X V (Nov. 28, 1908) ; House Document 1505, 60th Congress, 2d Session, pp. 5879—6056 contains the text of the hearings. 2 1 . H e declared that the principal users of spruce had bought over twelve thousand square miles of timber tracts in Quebec alone, with the International controlling seven thousand, or four and one-half million acres. House Document 1505, 60th Congress, 2d Session, p. 5904. T h i s process of hedging against exhaustion of American forests by acquisition of Canadian timber limits had been going on for many years. T h e International was reported to have increased its holdings 44 per cent to a total of four million, one hundred and five thousand acres in the fourteen months prior to January, 1908. Paper Trade Journal, X L V I (Jan. 30, 1908). 22. House Document

1502, 60th Congress, 2d Session, pp. 3314—9.

23. It will be remembered that Ontario had in 1900 prohibited the exportation of pulpwood cut from Crown lands. Quebec manipulated her stumpage charges so as to exact twenty-five cents more per cord on pulpwood exported from Crown lands than on such wood pulped in the Province. T h i s had been ruled an export tax, subjecting Crown-land wood from Quebec to the countervailing provisions of the Dingley Act. 24. Record, 61st Congress, 1st Session, p. 9 9 1 ; Paper Trade Journal, X L V I I I (Mar. 18, 1 9 0 9 ) ; Reciprocity with Canada.• Hearings before the Committee on Ways and Means of the House of Representatives 61st Congress, 3d Session on H . R . 3 2 2 1 6 (Washington, 1 9 1 1 ) , p. 170 ( N o document number was assigned to this title. Cited subsequently as Hearings, Ways and Means, 61st Congress, 3d Session); Reciprocity with Canada'. Hearings before the Committee on Finance of the United States Senate on H.R. 32216 An Act to Promote Reciprocal Trade Relations with the Dominion of Canada and for Other Purposes, Senate Document 834, 61st Congress, 1st Session, p. 154. President William Howard T a f t aptly characterized the Mann Report in a letter to Melville E. Stone, August 4, 1909, saying that it "was not a report as to a difference of conditions but was a recommendation of a diplomatic proposition to Canada to change conditions in Canada so that the paper makers of this country could stand $2, and by offering to Canadian manufacturers the opportunity to bring their paper in at [$2] to induce this change of condition . . . " William Howard Taft Papers ( T h e Library of Congress). 25. Paper Trade Journal, X L V I I I (Feb. 25, Mar. 1 1 , 1 9 0 9 ) ; House Document 1505, 60th Congress, 2d Session, pp. 8267—73.

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26. Record, 61st Congress, 1st Session, p. 189. T a f t ' s correspondence during the later stages of the debate refers several times to Payne's feeling that the $2.00 rate on newsprint, as carried in his bill, was too low to protect the industry adequately. T h e reader has doubtless noted that chemical pulp and higher-priced papers have not been mentioned in connection with the Mann Report or the Payne Bill. T h i s is because of the fact that the main interest of the present study is in cheap newsprint and the mechanical pulp which is its chief component. 27. Mann's speech, ibid., pp. 645—54; other remarks, pp. 708, 881, 894, 9 3 4 - 8 , 974—5; Paper Trade Journal, X L V I I I (Mar. 25, Apr. 1, 1909). 28. A . N . P . A . Report, 1909, pp. 4 2 - 5 ; N . Y . Tribune, Apr. 7 - 1 3 , 1909. 29. Paper Trade Journal, X L V I I I (June 10, 17, 1 9 0 9 ) ; Senate Document 56, 62d Congress, 2d Session, pp. 1226—7. 30. Record, 61st Congress, 1st Session, pp. 3390—3407, 3416—39; N . Y . Tribune, June 1 8 - 9 , 1909. 31. Record, 61st Congress, 1st Session, pp. 3455—68, 3478—83. 32. Ibid., pp. 3 4 8 9 - 9 2 , 3706, 3 7 9 0 - 1 , 3860; N . Y . Tribune, 26, 1909. 33. mittee duced volved

June

Ibid., p. 4 6 3 6 ; Ellis, op. cit., pp. 31—2. T h e Conference Comoriginally set the surtax rate at $4.00, but a printer's error reit to $2.00, where it remained, since correction would have inreturning the bill to conference. N . Y . Tribune, Aug. 1, 1909.

34. Record, 61st Congress, 1st Session, pp. 4693—4; Paper Trade Journal, X L V I I I (July 22, Aug. 5, 1 9 0 9 ) ; N . Y . Tribune, July 2 7 - 2 9 , 3 1 , 1909. In the light of the publishers' hullabaloo over the Payne-Aidrich legislation and the reciprocity fiasco of 1 9 1 1 T a f t wrote rather ruefully, " I realize now, though, that I made one mistake; I ought to have made as strong a point on paper as I did on hides . . . I believe that if we could have stuck to the $2.00 duty of the House bill, with the condition attached of free raw material from Canada, we should have done the right thing . . . " ( T o Francis E. Leupp, Nov. 23, 1 9 1 1 . Taft Papers.) T h e tactics of the press annoyed him at the time, and he wrote to William Dudley Foulke on July 1 5 : " I am not a high-tariff man, I am a low-tariff man; but I am in favor of a little justice and not of yellow journalism gone mad in order to accomplish some little personal profit for the proprietors of newspapers." Cf. also letters to Charles P. T a f t

NOTES

187

(July 1 3 ) , W . H . H . Miller (July 1 3 ) , Mrs. T a f t (July 17, 2 5 ) , H . V. Jones (Aug. 6 ) , and Payne to T a f t (Nov. 19, 1909), ibid. 35. T h e evidence at hand does not warrant a categorical statement, but there seems little doubt that Canadian assurances to this or a similar effect were secured. T h e late George F. Steele told the writer that he attended a conference at which a number of publishers agreed among themselves to a scaling down of duties over a period of years, in return for free access to Canadian wood. McCormick went from this conference to Ottawa, where he saw Laurier and Gouin, who agreed to give access to both fee and Crown-land wood in return for lowered duties. This information, said Steele, was conveyed to Mann. I have been unable to place this story exactly in the sequence of events. Cf. also Pafer Trade Journal, X L I X (Sept. 2, 1909). 36. Record, 61st Congress, 1st Session, pp. 4730—3; N . Y . Tribune, Aug. 1, 1909. 37. Pafer Trade Journal, X L I X (Aug. 5, Sept. 2, 1 9 0 9 ) ; A.N.P.A. Bulletin, 2037 (Aug. 3, 1909), pp. 5 4 5 - 6 , 2093 (Sept. 3, 1909), pp. 597—8; Ellis, of. cit., pp. 33-4. T h e actual duty on paper from Quebec was $6.10 because of a thirty-five-cent countervailing levy occasioned by Quebec's export tax on logs. CHAPTER

V

1. Survey of Pulf Woods on the Public Domain (Washington, 1920), Senate Document 234, 66th Congress, 2d Session, pp. 5—6; U . S. Tariff Commission, Tariff Information, 1923, pp. 37—9. Meantime few new machines were being installed in the States, and new Canadian mills brought five hundred daily tons into the market between 1 9 1 0 and 1916. Senate Document 49, 65th Congress, 1st Session, pp. 24—5. 2. Record, 61st Congress, 2d Session, p. 8; N . Y . Tribune, Dec. 7, 1909; Pafer Trade Journal, X L I X (Nov. 29, Dec. 9, 23, 1909). Medill McCormick quoted Cannon as saying that "he would see us in hell before he would even let us circulate a petition among the members for a conference." Ibid. (Oct. 28, 1909). 3. A.N.P.A. Bulletin, No. 2066 (Sept. 27, 1909), p. 7 1 9 , No. 2083 (Oct. 30), pp. 7 8 7 - 8 , No. 2099 (Dec. 4 ) , p. 859. 4. Ellis, of. cit., covers the general reciprocity story of 1 9 1 0 — 1 9 1 1 ; such parts of the present story as are not specifically documented are drawn from this account. T h e present more detailed account of the news-

i88

PRINT

PAPER

PENDULUM

print aspects should be viewed in proper perspective in the larger framework. 5. Paper Trade Journal, L (Jan. 6, 13, Feb. 10, 1 9 1 0 ) ; A.N.P.A. Bulletin, No. 2133 (Feb. 1, 1910), p. 75, No. 2154 (Mar. 19, 1910), p. 194. 6. A.N.P.A. Bulletin, No. 2154 (Mar. 19, 1910), p. 193; Pafer Trade Journal, L (Mar. 31, Apr. 7, 14, 1910). An editorial in this latter journal aptly characterized the situation: "In the Payne-Aldrich act the publishers did not profit, neither did the paper men, the paper and pulp schedules being left in such shape as to please no one. T h e maximum tariff failed to frighten the Canadians into letting us have free pulp wood, so the whole tariff revision scheme fell flat . . ." One immediate result was a tremendous stimulus to investment in the Canadian paper business. It was reported that by July, 1 9 1 1 , fifty-three millions of British and Canadian capital had been so invested; statistics of similar American investments were not available, though they must have been large. Ibid., LIII (Aug. 3, 1 9 1 1 ) . 7. A.N.P.A. Report, 1910, pp. 3 0 - 1 ; Ridder to Taft, April 28. Tajt Papers. A last-minute effort was evidently made through Laurier to persuade Gouin to ease the situation, but he refused. N. Y. Tribune, Apr. 28, 1910. 8. Memorandum in the Tajt Papers. 9. A.N.P.A. Bulletin, No. 2209 (June 9, 1910), p. 5 1 7 ; Paper Trade Journal, L (July 7, 1 9 1 0 ) ; Newfoundland Tariff Negotiations. EXCEPTIONALLY

CONFIDENTIAL,

TO BE FILED AS A CONFI-

D E N T I A L D O C U M E N T AND ISSUED O N L Y U P O N T H E W R I T T E N O R D E R O F

(printed pamphlet in the Philander C. Knox Papers (The Library of Congress), pp. 6—8). 10. It should perhaps be noted at this point that the Treasury Department ordered collectors to stop imposing countervailing duties of twenty-five and thirty-five cents, respectively, upon imports of pulp and paper made from Quebec's Crown-land wood after May I, when the export prohibition became effective. This was on the ground that a complete embargo put an end to the discrimination formerly practiced in the export levy. This put Quebec's exports on the same duty basis as those of Ontario. Paper Trade Journal, L (May 12, 1910), LI (Aug. 4, 1 9 1 0 ) ; A.N.P.A. Bulletin, No. 2191 (May 10, 1910), p. 440, No. 2251 (Aug. 6, 1910), p. 696. 1 1 . Daily Consular and Trade Reports (Washington, 1903 ff.) Aug. 8, Oct. 26, 1910; Pepper to C. W . Norton, Aug. 15, 1910, Tajt Papers-,

T H E S E C R E T A R Y OF STATE

NOTES

I89

Senate Document 56, 62d Congress, ist Session, p. 1 0 0 7 ; Canadian Tarif Negotiations. E X C E P T I O N A L L Y C O N F I D E N T I A L , TO BE FILED

AS A

CONFIDENTIAL

DOCUMENT

AND

ISSUED O N L Y

UPON

THE

W R I T T E N ORDER OF T H E S E C R E T A R Y OF STATE ( p r i n t e d p a m p h l e t i n t h e

Knox Pafers, pp. 37—8). T h i s pamphlet, cited subsequently as Can. Tar. Negot., takes the story to November 18, 1 9 1 0 . 12. Quotations from Ellis, of. cit., pp. 62, 65, 67. C f . also Fielding's remarks in introducing the proposals in Parliament, Pafer Trade Journal, L I I (Feb. 2, 1 9 1 1 ) . 13. A . N . P . A . Bulletin, No. 2338 (Dec. 24, i 9 i o ) , p p . 1 1 0 4 - 5 . 14. Senate Document 56, 62d Congress, ist Session, p. 1 2 2 3 ; A . N . P . A . Bulletin, N o . 2361 (Jan. 28, 1 9 1 1 ) , p. 81. T h e agreement left paper made from Crown-land wood subject to the Payne-Aldrich levy of $3.75 plus the $2.00 surtax. It was intended, therefore, as Ridder pointed out, to influence holders of Crown-land limits to put pressure upon the Provinces to relax their export restrictions so as to participate in the advantages of the American market enjoyed by the holders of private lands. 15. Quoted, Ellis, of. cit., p. 70. 16. Hearings, Ways Means, 6ist Congress, 3d Session, pp. 271—3; Pafer Trade Journal, L I I (Feb. 2, 1 9 1 1 ) ; United States Tariff Commission". Recifrocity with Canada: A Study of the Arrangement of ign (Washington, 1 9 2 0 ) , pp. 47—8, 69. Cited subsequently as U . S. Tariff Commission, Recifrocity with Canada. 17. Trade Refort of this

Record, 6 i s t Congress, 3d Session, pp. 1515—9, 1 6 1 8 ; Pafer Journal, L I V (Feb. 15, 1 9 1 2 ) ; Recifrocity with Canada, House 2 1 5 0 , 61 st Congress, 3d Session, p. 1. M c C a l l made no mention amendment in his report.

18. Hearings, Ways & Means, 6ist Congress, 3d Session, fassim; Senate Document 56, Ö2d Congress, ist Session, pp. 1145—7, 1224. T h e Senate hearings are found in Senate Document 834, 6ist Congress, 3d Session. 19. T h e Senate hearings are printed in Senate Document 56, 6 2d Congress, ist Session. T h e Ridder-Simmons colloquy is found on p. 1315. 20. Pafer Trade Journal, L I V (Feb. 15, 1 9 1 2 ) ; Pulf and NewsPrint Pafer Industry, Senate Document 3 1 , 62d Congress, ist Session, pp. 3 1 - 6 . 21. Pafer Trade Journal, L I I ( M a y 25, 1 9 1 1 ) ; Senate Document 56, Ö2d Congress, ist Session, pp. 1321—5, describes Root's discussion

190

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PENDULUM

of his amendment before the committee. Taft told of his connection with it in letters to Horace Taft (May 25) and St. Clair McKelway (June 13). Taft Papers. 22. A.N.P.A. Bulletin, No. 2518 (Sept. 28, 1911), p. 945, 2569 (Dec. 16), p. 1 1 8 1 ; Paper Trade Journal, LIII (Aug. 3, 24, Sept. 7, 1 9 1 1 ) , LIV (Feb. 15, 1912). 23. Paper Trade Journal, LV (Nov. 7, 1 9 1 2 ) ; A.N.P.A. Bulletin, No. 2533 (Oct. 21, 1 9 1 1 ) , p. 1021; A.N.P.A. Report, 1912, p. 24; Record, 62d Congress, 2d Session, pp. 3934, 6615, 10738; Taft Papers, June and July, 1912, contain a number of letters to the President urging a repealer. 24. U. S. Tariff Commission, Reciprocity with Canada, p. 56; A.N.P.A. Bulletin, No. 2598 (Jan. 27, 1912), pp. 73-5, 2902 (May 24> 19*3)1 P2 945 (Juty 26, 1913)* P- 675- Taft Papers, October, 1911—March, 1912, contain a considerable body of material on the executive aspects of this matter. 25. A.N.P.A. Bulletin, No. 2791 (Nov. 23, 1912), p. 1 1 1 9 ; A.N.P.A. Report, 1913, p. 30; Tarif Schedules. Hearings before the Committee on Ways and Means House of Representatives (Washington, 1913), House Document 1447, 62d Congress, 3d Session, p. 4742; Senate Document 49, 65th Congress, 1st Session, p. 55. 26. U. S. Tariff Commission, Reciprocity with Canada, p. 49; A.N.P.A. Bulletin, No. 2817 (Jan. 4, 1913), p. I ; Paper Trade Journal, LV, Nov. 21, 1 9 1 2 ) ; House Document 1447, 62d Congress, 3d Session, pp. 4748—51. The new regulation, affecting four companies— Laurentide, Price Bros., Belgo-Canadian and Wayagamack—became effective May 1, 1913. 27. Senate Document 234, 66th Congress, 2d Session, p. 7. U. S. Tariff Commission, Tarif Information, 1923, pp. 33—6, gives figures showing decisive Canadian advantage in cost of production between 1913 and 1916, ranging from $3.10 to $5.35 per ton. This advantage was due mainly to cheaper pulp, which in turn rested on lowcost wood. 28. The hearings, confined to a single afternoon and with each speaker limited to ten minutes unless granted more at the expense of another, are found in House Document 1447, 62d Congress, 3d Session, p. 4673 ff. 29. Record, 63d Congress, 1st Session, p. 1061; A.N.P.A. Bulletin, No. 2879 (Apr. 12, 1913), pp. 423-4. Finland, whose exports to the United States were then negligible, imposed export duties.

191

NOTES

30. Desire to be rid of the expense connected with Norris' operations may have played its part also. Cf. A.N.P.A. Refort, 1913, pp. 32—4. 31. Record, 63d Congress, 1st Session, pp. 1061—3, 1149—50, 1210, 3600, 3695-3703, 4 3 4 2 - 7 ; Pafer Trade Journal, LVI, June-Sept., fassim, reports Norris' activities in thwarting the efforts of certain Democrats on the Finance Committee to retain some measure of retaliation. 32. A.N.P.A. Bulletin, No. 2983 (Oct. 13, 1 9 1 3 ) , pp. 827-8. CHAPTER

VI

1. U. S. Tariff Commission, Reciprocity with Canada, p. 50; Ibid., Tariff Information, 1923, p. 25; Pafer Trade Journal, LVIII (Feb. 19, 26, Mar. 16, May 14, 1914), LIX (July 9, 1914). 2. Pafer Trade Journal, LIX (Aug. 13, 1914), LXI (Aug. 5, 1 9 1 5 ) , LXII (Feb. 17, 1 9 1 6 ) ; A.N.P.A. Bulletin, No. 3 ^ 4 (Aug. 15, 1 9 1 4 ) , p. 637; W. A. Averill, Prices of Pafer (Pamphlet: Washington, 1 9 1 9 ) , pp. 7 - 8 . 3. Pafer Trade Journal, LVIII (Jan. 1, 1 9 1 4 ) , LX, fassim, LXI (Sept. 23, 1915) ; A.N.P.A. Bulletin, No. 3273 (Mar. 6, 1 9 1 5 ) ^ . 235, 3392 (Nov. 27, 1 9 1 5 ) , p. 621, 3400 (Dec. 18, 1 9 1 5 ) , p. 645; Senate Document 49, 65th Congress, 1st Session, pp. 40—2; E. O. Merchant, " T h e Government and the News-Print Paper Manufacturers." Quarterly Journal of Economics, XXXII (Feb., 1918), pp. 238—9. 4. Merchant, o f . cit., pp. 240—3; Senate Document 49, 65 th Congress, 1st Session, pp. 80-1, 107, 1 1 3 - 4 , 1 3 2 ; A.N.P.A. Bulletin, No. 3517 (Sept. 6, 1916), pp. 475-75. Open market prices of roll paper in carload lots were generally under $2.35 per hundredweight in 1915 ; the minimum price for the third quarter of 1916 was $3.00, and by December I it had risen to $5.00. Senate Document 49, 65th Congress, 1st Session, p. 51. 6. A.N.P.A. Bulletin, 1916, fassim-, Pafer Trade Journal, LXX (May 6, 1920). 7. Senate Document 49, 65th Congress, 1st Session, pp. 15—7; Pafer Trade Journal, LXII (Apr. 27, May 4, 25, 1 9 1 6 ) . Whence came the stimulus for this mid-western drive is not clear. It was suggested at the time that an agency furnishing Oklahoma papers with "boiler plate" copy had raised the price, alleging increased paper costs, and so induced pressure upon Congress.

192

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8. Senate Document Pafer

Trade Journal,

PAPER

PENDULUM

49, 6 5 t h Congress, ist Session, pp. 1 6 , 142—3; L X I I ( M a y 4, 1 9 1 6 ) . T h i s journal editorialized

as follows: " i t should be put down in red ink that the daily newspaper publishers of the country have no grievance against the men w h o make their white paper. If they had they would have said so at the annual convention of the American Newspaper Publishers' Association, held

in

N e w Y o r k C i t y last week. Instead of giving expression to any grievance the publishers listened attentively to proposals as to how they could cut down on their consumption of white paper . . . " 9. Pafer

Trade Journal, L X I I (June 22, 1 9 1 6 ) , L X I I I (July 1 3 , 20,

27, 1 9 1 6 ) . 10. N . Y . Times,

A u g . 2, 1 9 1 6 ; A . N . P . A . Bulletin,

28, 1 9 1 7 ) , pp. 361—2; Pafer

Trade

Journal,

No. 3647 (Apr.

LXIII

( A u g . 3,

10,

1916). 1 1 . Pa-per Trade

Journal,

L X I I I (Sept. 2 1 , 1 9 1 6 ) ; A . N . P . A .

Bul-

letin, N o . 3506 ( A u g . 19, 1 9 1 6 ) , p. 4 1 5 , 3 5 1 4 (September 2, 1 9 1 6 ) , p. 4 6 6 ; Record,

64th Congress, ist Session, pp. 1 4 0 1 1 — 2 . For an ex-

planation of this increased tempo, cf. note 40, chapter V I . 1 2 . Pafer

Trade

A . N . P . A . Bulletin,

Journal,

LXIII

(Oct.

19, N o v .

2, 9,

1 9 1 6 ) , p. 6 3 1 , 3 5 6 1 ( D e c . 2, 1 9 1 6 ) , p. 6 4 6 ; News-Print vestigation:

1916);

N o . 3 5 3 9 ( O c t . 2 1 , 1 9 1 6 ) , p. 5 6 1 , 3 5 5 7 ( N o v . 2 5 ,

Re fly of the Federal

Trade

p 5 of the Senate, Senate Document

Commission

Pafer

to Resolution

InNo.

6 1 , 65th Congress, 1st Session, p. 5.

T h e $65 price was a common figure for l a t e - 1 9 1 6 contracts, though at least two producers refused to follow the others up the price ladder and contracted at $ 1 0 to $ 1 8 below the usual level. Senate Document

49,

6 5 t h Congress, ist Session, p. 1 1 5 . 1 3 . Pafer Bulletin,

Trade Journal, L X I I I (Dec. 7, 1 4 , 2 1 , 1 9 1 6 ) ; A . N . P . A .

N o . 3 5 6 9 ( D e c . 1 6 , 1 9 1 6 ) , p. 6 7 5 , 3 5 7 2 ( D e c . 23,

1916),

pp. 6 9 5 - 8 , 3 5 7 6 ( D e c . 30, 1 9 1 6 ) , pp. 7 0 9 - 1 1 ; N . Y . Times, D e c . 1 3 , 17,

1916.

14. Pafer

Trade

Journal,

1 9 1 7 ) ; Senate Document Times,

L X I I I ( D e c . 18, 1 9 1 6 ) , L X I V (Jan. 4,

6 1 , 65th Congress, ist Session, p. 6 ; N . Y .

D e c . 1 6 , 30, 1 9 1 6 .

1 5 . O n the price situation cf. U . S. T a r i f f Commission, Tariff formation,

1 6 . A . N . P . A . Bulletin,

N o . 3 5 9 0 (Jan. 22, 1 9 1 7 ) , p. 4 1 ,

( F e b . 5, 1 9 1 7 ) , p. 6 7 ; N . Y . Times, Journal,

In-

1 9 2 3 , p. 2 5 ; Averill, of. cit., p. 9. Jan. 5, 2 7 , 1 9 1 7 ; Pafer

L X I V (Jan. 1 1 , 1 9 1 7 ) ; Senate Document

ist Session, p. 6.

3599 Trade

6 1 , 6 5 t h Congress,

NOTES

193

17. Pafer Trade Journal, L X I V (Feb. 15, 22, Mar. 1, 1 9 1 7 ) ; N . Y . Times, Feb. 1 1 , 15, 24, 26, 27, 1 9 1 7 ; Merchant, of. cit., p. 244. 18. N . Y . Times, Mar. 4, 1 9 1 7 ; A.N.P.A. Bulletin, No. 3617 (Mar. 3, 1 9 1 7 ) , pp. 1 3 7 - 4 1 ; Pafer Trade Journal, L X I V (Mar. 8, 1 9 1 7 ) ; News-Print Pafer Industry: Letter jrom the Federal Trade Commission Transmitting in Resfonse to a Senate Resolution of Afril 24, igi6, a Refort Relative to an Investigation of the News-Print Pafer Industry of the United States, Senate Document 3, 65 th Congress, Special Session of the Senate, pp. 3—12. T h e Commission was particularly severe in its strictures upon the N . P . M . A . : "prices were actually made in the industry without the operation of free competitive influences in their determination. By means of a trade association, organized ostensibly for a lawful purpose, conditions in the market were influenced in a very substantial degree and in a manner which sustained a price which would not be possible under conditions of free competition. Concert of action was made possible through this association in the matter of discouraging new production of news-print paper, in the division of customers, in the promotion of fear that the supply would not be equal to the demand, in disseminating propaganda justifying higher prices because of alleged higher costs, and in other ways." Ibid., p. 6. T h e agreement was signed by the International, Abitibi Power & Paper Co. (Ltd.), Spanish River Pulp & Paper Mills (Ltd.), T h e Laurentide Co. ( L t d . ) , the BelgoCanadian Pulp & Paper Co., T h e Northwest Paper Co., and Taggarts Paper Co. T h e Great Northern, a large American producer, had not been involved in the price inflation practiced by so many concerns. 19. Merchant, of. cit., pp. 2 4 5 - 6 ; A.N.P.A. Bulletin, No. 3642 (Apr. 14, 1 9 1 7 ) , pp. 3 4 5 - 8 ; Pafer Trade Journal, L X I V (Apr. 5, 1 9 1 7 ) , L X V I (Feb. 7, 1 9 1 8 ) ; Senate Document 6 1 , 65th Congress, 1st Session, pp. 6—7; Senate Document 49, 65 th Congress, 1st Session, pp. 140—I. It should perhaps be noted that the A.N.P.A. Paper Committee objected to the indictments and secured a promise from the Department of Justice to put off prosecution of those indicted if they joined the arbitration scheme. A.N.P.A. Bulletin, No. 3647 (Apr. 28, 1 9 1 7 ) , p. 363. Those indicted were: George H . Mead, Philip T . Dodge, Edward W . Backus, George Cahoon, Jr., G . H . P. Gould, Alexander Smith, and F. J. Sensenbrenner. T h e first five were members of the N.P.M.A.'s Executive Committee, Smith was a Chicago banker prominent in underwriting paper mills, and Sensenbrenner had been active in organizing the Association. Four—Dodge, Mead, Smith, and Cahoon—were signatories of the Trade Commission proposal. Steele,

PRINT PAPER PENDULUM

194

the Secretary, was not indicted, as he had given evidence before the grand j ury. 20. A.N.P.A. Bulletin, No. 3662 (May 19, 1917), p. 429, 3676 (June 2, 1917), p. 526. 21. Senate Document 49, 65 th Congress, 1st Session, pp. 11—3, 127-31. 22. N . Y. Times, June 14, July 28, 1 9 1 7 ; A.N.P.A. Bulletin, No. 3680 (June 16, 1 9 1 7 ) , p. 549, 3690 (June 23, 1917), pp. 599-600, 3710 (Aug. 2, 1 9 1 7 ) , p. 665; Paper Trade Journal, LXIV (June 21, 28, 1917), LXV (July 12, 19, 26, Sept. 6, 1917), LXVI (Feb. 7, 1918). A number of editorial associations composed of smaller papers adopted resolutions supporting the T r a d e Commission proposals. 23. A.N.P.A. Bulletin, No. 3735 (Sept. 8, 1 9 1 7 ) , pp. 755-60. 24. N . Y. Times, Oct. 8, 9, 1 9 1 7 ; Record, 65th Congress, 1st Session, pp. 7323, 7874; Government Control and Regulation of PrintPaper Industry, Senate Report 177, 65 th Congress, 1st Session (submitted Oct. 6, 1917), pp. 1—11. 25. A.N.P.A. Bulletin, No. 3774 (Nov. 10, 1 9 1 7 ) , p. 919; Paper Trade Journal, LXV (Nov. 22, 1 9 1 7 ) ; N . Y. Times, Nov. 9, 13, 16, 18, 24, 1917. 26. A.N.P.A. Bulletin, No. 3782 (Nov. 26, 1 9 1 7 ) , pp. 943-9» 3783 (Nov. 27, 1917), pp. 951-8, 3786 (Nov. 30, 1917), pp. 9 6 3 - 7 4 ; N . Y. Times, Nov. 27, 28, Dec. 13, 1917. Dodge, Mead, Cahoon and Backus paid $2500 each, Sensenbrenner $1000. Smith was in Europe on war work at the time of the settlement. A letter allegedly sent by Steele to the defendants reflects the temper and tactics of the Association: "we went into this proposition of advising the newspaper publishers that there was going to be a great shortage of newsprint paper next Fall [1916], not because we loved the publishers or wanted to do a benevolent, high and philanthropic thing, but because we felt it would produce such an efect on their minds that they would not hesitate to sign up contracts at high prices when times of renewal came around if they knew there was an actual shortage in supply. It was to serve our own purposes and to help ourselves that we took this ground with them. I A M T H O R O U G H L Y SATISFIED T H I S A T T I T U D E OF OURS HAS A C T U A L L Y C O N T R I B U T E D V E R Y L A R G E L Y TO T H E R E S U L T T H A T THE

NEWSPAPER

PUBLISHERS

NOW

REALIZE

THAT

WE

HAVE

THEM

F I R M L Y IN OUR P O W E R AND T H A T T H E R E IS NO USE OF T H E I R SQUIRM-

Quoted in A.N.P.A. Bulletin, No. 3774 (Nov. 26, 1 9 1 7 ) , pp. 969-70. 27. Paper Trade Journal, LXV (Dec. 6, 20, 27, 1 9 1 7 ) ; A.N.P.A.

ING OR T W I S T I N G A T A L L . "

NOTES

Bulletin, No. 3 8 1 2 (Dec. 29, 1 9 1 7 ) , pp. 1133—4; Merchant, of. cit., p. 252. 28. U. S. Tariff Commission, Tariff Information, 1923, p. 25. Open market prices dropped slightly during the first quarter, perhaps under the influence of recent events, rose slightly in the second quarter, and held steady until the end of 1919. 29. Record, 65th Congress, 2d Session, pp. 662-89, 7°7 - 2 3> 758—9, 8 2 1 - 3 2 , 875-88, 1 9 2 2 ; N . Y. Times, Jan. 10, 12, 16, 1 9 1 8 ; Pafer Trade Journal, LXVI (Jan. 17, 24, Feb. 14, 1 9 1 8 ) . 30. A.N.P.A. Bulletin, No. 3827 (Jan. 26, 1 9 1 8 ) , p. 54, 3 9 1 9 (June 2 1 , 1 9 1 8 ) , p. 689, 3929 (July 1 7 , 1 9 1 8 ) , p. 7 1 8 , 3941 (Aug. 7, 1 9 1 8 ) , p. 763, 3971 (Oct. 4, 1 9 1 8 ) , pp. 865-6, 4 0 1 2 (Dec. 12, 1 9 1 8 ) , pp. 965-8; Pafer Trade Journal, LXVI (June 1 3 , 1 9 1 8 ) , LXVI 11 (Feb. 6, 1 9 1 9 ) ; N. Y. Times, June 5, 20, 1 9 1 8 . 31. An acute contemporary analysis of these developments, tending to exculpate the manufacturers and to blame publishers for their own predicament, is contained in an address delivered by W . J. Pape to the National Editorial Association on March 11, 1921. Pafer Trade Journal, LXXII (Mar. 17, 1 9 2 1 ) . 32. U. S. Tariff Commission, Tariff Information, 1923, p. 17. Toward the end of the year it was asserted that business interests were budgeting more than necessary to advertising in order to lighten excessprofits taxes, advertising charges being deductible in computing these levies. This was denied with sufficient vehemence to lend considerable color to the accusation. 33. A.N.P.A. Bulletin, No. 4 1 1 8 (Aug. 9, 1 9 1 9 ) , p. 323, 4 1 2 1 (Aug. 16, 1 9 1 9 ) , p. 3 3 1 , 4 1 3 3 (Sept. 1 3 , 1 9 1 9 ) , p. 369, 4148 (Oct. 2 5> I 9 I 9 ) > P- 423> 4 2 I 7 (Apr. 28, 1920), p. 229. Many contracts contained a new provision, reflecting the strong position of the manufacturers, providing for periodic price revisions during the year. 34. Pafer Trade Journal, LXIX (Nov. 20, 1919); Record, 66th Congress, 1st Session, pp. 4012, 4235—6, ibid., 2d Session, p. 100. 35. N. Y. Times, Apr. 30, May 14, 1920; Pafer Trade Journal, LXXII (Mar. 17, Apr. 14, 1 9 2 0 ) ; Hearings before the Committee on Finance, United States Senate on the Profosed Tariff Act of 1921 (H.R. 7456), Seriate Document 108, 67th Congress, 2d Session, p. 4880. 36. A.N.P.A. Bulletin, No. 4 2 1 7 (Apr. 28, 1920), pp. 218, 227, 233, 4408 (May 17, 1 9 2 1 ) , p. 3 7 1 . 37. Senate Document 108, 67th Congress, 2d Session, pp. 4880—1, 4907-9. 38. Pafer Trade Journal, LXXII (Mar. 17, Apr. 14, 1 9 2 1 ) ; N . Y.

196

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Times,

PAPER

PENDULUM

A p r . 9, 1920. T h e N e w s Print Service Bureau was organized in

January,

1918,

following the

dissolution of

the Newsprint

Manu-

facturers' Association in 1 9 1 7 to take over the legitimate aspects of the latter's activities. It was soon placed under the direction of R . S. Kellogg, whose statistical studies proved of great value to the trade. 39. Record,

66th Congress, 2d Session, pp. 4 3 3 7 — 4 5 ;

and Consumption Secretary Resolution

of Print Paper in the United

of Commerce,

Transmitting

48$ Regarding

the Supply,

of Print Paper in the United

Report

Distribution

States: Letter in Response

Distribution,

and

States, House Document

from to

the

House

Consumption

696, 66th C o n -

gress, 2d Session, pp. 1—20. 40. Newsprint

Paper Industry,

Hearings

ant to S. Res. 164, Authorizing

Committee

gate 'Newsprint Paper Industry,

1920

before Subcommittee on Manufactures

Investi-

(Washington, 1 9 2 0 ) , pp. 13—6,

34, 61—3. C i t e d subsequently as Manufacturing Times,

Pursu-

to

Comm. Hearings.

N. Y.

A p r . 30, 1 9 2 0 . Patterson laid the beginning of the trouble to

the fact that the first action of the mill men, in the autumn of 1 9 1 6 , in prorating tonnage and raising prices, was made without taking the publishers into their confidence as to the seriousness of the situation. T h i s , he argued, led to a defensive reaction and the assumption of a mistaken attitude of antagonism toward the publishers w h i c h ought not to be repeated in the present emergency. H e concluded by stating that he felt that the contract price increases for 1 9 2 0 were justifiable. C f . also Paper Trade Journal, L X X ( M a y 6, 1 9 2 0 ) . 4 1 . Paper Trade Journal,

L X X ( M a y 6, 1 3 , 1 9 2 0 ) ; N . Y .

M a y 2, 6, 8, 1 1 , 1 3 , 1 9 2 0 ; Manufacturing

Comm.

Hearings,

Times,

Secret

(a

portion of these hearings were held privately to spare paper companies from divulging trade secrets), pp. 69—71, 1 1 2 . 4 2 . T h i s document, Senate Report

662, 66th Congress, 2d Session,

is not available in the regular document series. It was read into Congressional

Record,

The

70th Congress, 2d Session, pp. 5055—8, by Walsh.

4 3 . Paper Trade Journal, L X V I I I ( M a y 1, 1 9 1 9 ) . 44. Ibid.,

L X I X ( A u g . 7, 1 9 1 9 ) .

4 5 . Record, Mill,

66th Congress, 2d Session, pp. 3436—8, 3 5 6 0 - 4 ;

X L I I I (Feb. 7, 1 9 2 0 ) ; N . Y . Times,

fairs Committee, United

States, Hearings

of Commission Governments strictive

House,

Exportation

of Pulp

Wood

on S.J. Res. 152, Authorizing

to Confer of Quebec,

with

Dominion

of Said Provinces

from the

Government

Ontario, and New Brunswick

Orders in Council

Paper

Feb. 3, 1 9 2 0 ; Foreign

Relative

Canada

Afto

Appointment or

Provincial

as to Certain

Re-

to Exportation

of

NOTES Pulfzvood

197 Therefrom

to United

States, Mar. 9—April

2 7 , 1920

(Wash-

ington, 1 9 2 0 ) , pp. 5—84. U n d e r w o o d commented to the House C o m mittee on Foreign Affairs apropos Section 2: " I do not think a blind man can fail to see that that means that this commission shall report to the Congress what kind of embargo we shall lay against C a n a d a . " 4 6 . N . Y . Times, 1 9 2 0 ) ; Pafer

A p r . 27, 1 9 2 0 ; Pafer

Mill,

XLIII

(Mar.

13,

Trade Journal, L X X ( A p r . 29, 1 9 2 0 ) . A Canadian paper

man was quoted as saying: "Senator U n d e r w o o d

is speaking in the

interests of one company, the International Paper C o m p a n y . "

Ibid.,

( M a y 6, 1 9 2 0 ) . 4 7 . Record,

66th Congress, 2d Session, pp. 8439—40; Pafers

lating to the Foreign

Relations of the United

States, 1921

Re-

(Washington,

1 8 7 0 ff.), I, pp. 302—11. M e m o r a n d u m of M a y 2 7 , 1 9 2 0 . T h e measure was looked on in Canada as a blackmailing scheme. The Gazette Pafer

Montreal

was quoted as calling it " a n insolent and dishonest" proposal. Trade Journal, L X X (June 3, 1 9 2 0 ) .

48. T h e end of the year found the Board of Directors and the Paper Committee of the A . N . P . A . meeting w i t h the N e w s Print

Service

Bureau in a session presided over by President D o d g e of the International Paper C o . w h i c h set up a j o i n t committee of ten to discuss mutual problems. John Norris, in his grave since 1 9 1 4 , must have stirred uneasily at this portent. A . N . P . A . Bulletin,

N o . 4408 ( M a y 1 7 , 1 9 2 1 ) , p. 3 6 7 , re-

porting a meeting of November 19, 1 9 2 0 . 49. Ibid.,

p. 3 6 7 ; Nezosfrint

man of the Federal Senate Resolution the Nezosfrint

¡¡y

Trade

Pafer Industry.

Commission

(yoth

Pafer Industry,

Congress),

Letter from the

Transmitting, A Refort

Senate Document

Chair-

in Resfonse

on Certain 214, Sfecial

to

Phases of Session of

the Senate ( 7 1 s t Congress; July 8, 1 9 3 0 ) , p. 109. 50. Record, 4 6 4 4 ; Pafer

6 7 t h Congress, 1st Session, pp. 2694—5, 4499—4500, Trade Journal, L X X I I ( M a y 26, 1 9 2 1 ) ; A . N . P . A .

tin, N o . 4 6 1 0 ( M a y 4, 1 9 2 2 ) , p. 3 5 7 ; Foreign

Relations,

Bulle-

1 9 2 1 , pp.

2 9 9 — 3 1 1 , 1 9 2 3 , pp. 494—501. A stout but unsuccessful attempt was made to levy 5 per cent ad valorem on chemical pulp, to the advantage of the f e w mills devoted exclusively to that manufacture. CHAPTER

VII

1. Jones, of. cit., p. 80. 2. It should be noted that any impetus to n e w paper production makes itself felt in the market only after a lapse of about two years, it

198

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taking that length of time to prepare the necessary mills and water power. By the same token, once under way, heightened production is apt to overlap a period of decreased consumption, resulting in unemployment or oversupply, or both. 3. Senate Document 2 1 4 , 71st Congress, Special Session Senate, pp. 31—2; A.N.P.A. Bulletin, No. 4662 (July 28, 1 9 2 2 ) , p. 603, 4670 (Aug. 26, 1 9 2 2 ) , p. 645, 4678 (Sept. 8, 1 9 2 2 ) , p. 677, 4701 (Oct. 2 1 , 1 9 2 2 ) , p. 783; Paper Trade Journal, CIII (Oct. 1 5 , 1936). 4. Paper Trade Journal, LXXIV (Apr. 20, 27, 1 9 2 2 ) ; United States Tariff Commission: The Trade Agreement with Canada (Washington, 1 9 3 6 ) , p. 3. 5. Paper Trade Journal, LXXVI (Feb. 22, May 24, June 28, 1 9 2 3 ) , L X X V I I (July s, 26, Oct. 30, Nov. 6, 1 9 2 3 ) , L X X X (Feb. 5, 1925). Senator George A. Moses told the A.P.P.A. early in 1925 that he had gone to Canada in 1923 to investigate the Royal Commission and had quickly satisfied himself that "the whole question had risen through skillful propaganda started by an extensive land owner who desired to get more money and who succeeded in making it a national problem." Ibid., (Feb. 12, 1 9 2 ; ) . Cf. also N. Y . Times, July 6, 1 1 , 1 3 , Aug. 3, I5> I9236. Paper Trade Journal, L X X V I I (July 1 2 , 19, 1 9 2 3 ) ; N. Y. Times, July 16, 17, 1 9 2 3 ; Foreign Relations, 1923, pp. 494—8. 7. For the Royal Commission, cf. Paper Trade Journal, LXXVII, LXXVIII, passim. On other developments covered in the foregoing paragraph, cf. ibid., L X X V I I I (Mar. 20, Apr. 17, 1924), L X X X (Jan. 22, 1 9 2 5 ) , L X X X I I (Feb. 4, Mar. 4, 1 9 2 6 ) ; N. Y. Times, Aug. 3, Oct. 7, 1923, Feb. 14, 1925. 8. Paper Trade Journal, L X X X (Jan. 15, Feb. 5, 1 9 2 5 ) ; N. Y. Times, July 20, 1924, Feb. 2, 1925, Jan. 30, 1926. 9. Paper Trade Journal, L X X V I I I (June 5, 1924), L X X I X (July 3, 1 9 2 4 ) ; N. Y . Times, Mar. 7, 27, 1925. 10. Paper Trade Journal, L X X V I I I (June 12, 1924), L X X X (Jan. I, Feb. 5, Apr. 9, 1 9 2 5 ) , L X X X I (July 16, 1 9 2 5 ) , L X X X I I (Feb. 4, 1 9 2 6 ) ; N. Y . Times, Jan. 3 1 , 1926; A.N.P.A. Bulletin, No. 5213 (Apr. 30, 1926), p. 233. 1 1 . Paper Trade Journal, LXXXII, passim, details International's Canadian operations. For particular aspects, cf. ibid., (Apr. 29, May 20, June 24, 1926), L X X X I I I (July 29, Aug. 26, Nov. 18, Dec. 30, 1926), XCII (June 18, 1 9 3 1 ) ; N. Y. Times, Jan. 28, 1 9 2 7 ; A.N.P.A. Bulle-

I99

NOTES

tin, No. 5 2 1 3 (Apr. 30, 1926), pp. 2 3 0 - 1 , 5374 (May 5, 1 9 2 7 ) , p. 275. 12. Pdf er Trade Journal, L X X X I V (Jan. 20, 27, Feb. 3, 10, Mar. 3, 24, May 26, 1 9 2 7 ) ; A.N.P.A. Bulletin, No. 5521 (May 3, 1928), p. 1 4 5 ; N. Y . Times, Jan. 16, 1927. 1 3 . Paper Trade Journal, L X X X I V (May 5, 1 9 2 7 ) , L X X X V (Nov. 3, 1 9 2 7 ) ; A.N.P.A. Bulletin, No. 5521 (May 3, 1928), p. 1 7 0 ; N. Y . Times, June 24, Oct. 25, Dec. 18, 1 9 2 7 ; Senate Document 2 1 4 , 71st Congress, Special Session Senate, pp. 36, 85. 14. Paper Trade Journal, L X X X V I (May 17, 24, June 7, 2 1 , 1928), L X X X V I I (Aug. 23, Sept. 1 3 , 1 9 2 8 ) , L X X X V I I I (Feb. 2 1 , Mar. 7, 14, 1929) ; Senate Document 2 1 4 , 71st Congress, Special Session Senate, pp. 36—46, 85—90 (This contains the best brief account available); A.N.P.A. Bulletin, No. 5521 (May 3, 1928), pp. 1 7 1 - 2 , 5631 (May 9, 1929), p. 1 7 7 ; N. Y. Times, Oct., 1928, through Feb., 1929, passim, gives a running account of such phases of the negotiations as were disclosed to the public. 15. A complete file of the A.N.P.A. Bulletin was not available to the writer at this point in the narrative. The principal developments of policy of 1928—1930 are summarized or quoted in A.N.P.A. Bulletin, No. 5631 (May 9, 1929), pp. 177—216, from which the following account is taken unless otherwise indicated. 16. Control of White-Paper Business. Hearings, joth Congress, 2d Session, on S. Res. 292, to Investigate Activities of Groups of Foreign Citizens Controlling Supply of White Paper in United States, January 30, i929, pp. 1 - 5 . 17. The situation was complicated by the fact that the International had loaned Thomason part of the purchase price of the Journal. The company in 1928 had embarked deliberately upon the practice of investing in newspapers as a means of securing a market for its output, but Graustein denied that the plan contemplated any effort to influence policy. Senate Document 214, 71st Congress, Special Session Senate, pp. 92-7. CHAPTER

VIII

I. Paper Trade Journal, L X X X I X (Sept. 5, 1929), XC (Feb. 20, 1 9 3 0 ) ; Senate Document 214, 71st Congress, Special Session Senate, pp. 46-7.

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2. N . Y . Times, Nov. 2 1 , Dec. 9, 17, 1 9 2 9 ; A . N . P . A . Bulletin, N o . 5694 (Nov. 19, 1 9 2 9 ) , p. 5 2 5 ; Pafer Trade Journal, L X X X I X (Nov. 28, 1 9 2 9 ) . 3. Senate Document 214, 71st Congress, Special Session Senate, pp. 46, 101—3; Paper Trade Journal, L X X X I X (Oct. 24, Dec. 5, 12, 19, 26, 1 9 2 9 ) ; A . N . P . A . Bulletin, N o . 5694 (Nov. 19, 1 9 2 9 ) , pp. 5 2 4 - 6 , 5704 (Dec. 10, 1 9 2 9 ) , pp. 5 9 4 - 6 0 3 , 5753 ( M a y 14, 1 9 3 0 ) , pp. 1 6 0 - 2 ; N . Y . Times, Oct. 14, 16, Nov. 27, 28, 30, Dec. 3, 5, 9, 10, 13, 22, 3 1 , 1929. 4. Pafer Trade Journal, X C I I (Feb. 5, 1 9 3 1 ) ; A . N . P . A . N o . 5753 ( M a y 14, 1 9 3 0 ) , pp. 1 6 2 - 7 6 .

Bulletin,

5. Pafer Trade Journal, X C (Jan. 16, 23, Feb. 6, 13, Mar. 20, 1 9 3 0 ) ; N . Y . Times, Jan. 1 5 , 1930. 6. Pafer Trade Journal, X C (Apr. 3, M a y 22, June 19, 1 9 3 0 ) , X C I (Sept. 1 1 , 25, Oct. 2, Nov. 6, 13, Dec. 4, 1 9 3 0 ) ; N . Y . Times, Sept. 19, 1 9 3 0 ; A . N . P . A . Bulletin, N o . 5809 (Dec. 9, 1 9 3 0 ) , pp. 4 8 2 - 4 . 7. Pafer Trade Journal, X C I I (Feb. 19, Apr. 23, M a y 2 1 , 1 9 3 1 ) , X C I I I (July 9, Dec. 10, 1 9 3 1 ) , X C I V (Feb. 18, Apr. 28, 1 9 3 2 ) ; A . N . P . A . Bulletin, N o . 5856 ( M a y 6, 1 9 3 1 ) , pp. 2 2 2 - 4 , 5 9 1 9 (Nov. 2 1 , 1 9 3 1 ) , pp. 503-45 N . Y . Times, Apr. 20, 22, M a y 16, Nov. 1 5 , Dec. 2, 8, 1 9 3 1 . Canadian mills operated at sixty per cent capacity in I93IA n example of the vast inflationary movement in the paper industry is found in the reorganization of Canada Power into the Consolidated Paper Corporation (with Anglo-Canadian reverting to its previous ownership) with reduction of capitalization from $103,832,266 to $52,627,596. 8. T h e origin of these difficulties is to be found to a considerable extent in the continued decline of consumption. T h e Paper Committee reported to the publishers in M a y , 1932, that the greatest decline in advertising lineage in the history of publishing had occurred since the beginning of the year. It warned, however, that publishers must not rest secure in the impression that the present buyer's market would endure indefinitely: "Desperate conditions usually result in desperate attempts at cure . . . " A . N . P . A . Bulletin, No. 5983 ( M a y 19, 1 9 3 2 ) , pp. 1 9 3 - 4 ; Pafer Trade Journal, X C V (Sept. 8, 22, 29, Nov. 3, Dec. 8, 1 9 3 2 ) ; N . Y . Times, June 29, Sept. 15, 16, 18, 22, Oct. 18, 23, 26, Nov. 12, 18, Dec. 14, 1932. 9. Pafer Trade Journal, X C V I (Feb. 16, 1 9 3 3 ) , X C V I I I (Feb. 22,

NOTES

201

1934); N. Y. Times, Apr. 18, 1933; A.N.P.A. Bulletin, No. 6111 (Apr. 28, 1933), pp. 2 6 8 - 9 ; J°hn A. Guthrie, The Newsprint Pafer Industry. An Economic Analysis (Cambridge: Harvard University Press, 1941), pp. 109-10. 10. Pafer Trade Journal, XCIX (Sept. 27, 1934) ; Ralph V. Harlow, The Growth of the United States (New York: Henry Holt, 1943), II, pp. 534-6. 11. Pafer Trade Journal, XCVII (July 20, Aug. 17, 24, Sept. 7, 14, 1933); N . Y. Times, July 18, Sept. 7, 1933; A.N.P.A. Bulletin, No. 6168 (Sept. 8, 1 9 3 3 ) , p- 50312. Pafer Trade Journal, XCVII (Oct. 26, Nov. 2, 9, 23, 1933); N. Y. Times, Oct. 24, 25, Nov. 3, 1933. 13. Pafer Trade Journal, XCVIII (Jan. 25, 1934); N. Y. Times, Jan. 19, 1934; Jones, o f . cit., pp. 395—400; A.N.P.A. Bulletin, No. 6266 (May 2, 1934), pp. 254—69, carries the story of Association policy through that date. 14. These statements, consisting of the original telegrams, letters, and editorial excerpts, are bound in a volume entitled Newsfrint Recommendations, Volume B-i, in Records of the National Recovery Administration, T h e National Archives. 15. Pafer Trade Journal, XCVIII (Feb. 8, Mar. 22, 1934); N . Y. Times, Jan. 19, Feb. 2, 3, 1934. T h e arguments of Hanson and Patterson (typewritten copies) are bound in Newsfrint Recommendations, Volume B, in Records of the National Recovery Administration, T h e National Archives. McMillen's printed pamphlet, "Industrial Advisor's Report on Recommendation of Newsprint Code Authority . . ." is bound in ibid., Volume A. 16. Pafer Trade Journal, XCIX (Aug. 9, 1934) ; N. Y. Times, Apr. 7, July 20, Aug. 1, 4, 1934; Letter of Berry to L. B. Palmer, April 12, 1934, Newsfrint Recommendations, Volume A; Jones, o f . cit., pp. 401-3. 17. Quoted in Jones, o f . cit., p. 403. Jones himself comments: "There can be no doubt that what the industries expected to derive from the code was price stability and a guarantee of future profits . . . and . . . to obtain protection from foreign competition by resorting to Section 3e of the Act . . ." 18. Ibid., pp. 4 2 5 - 7 . 19. Pafer Trade Journal, XCVIII (May 10, 24, 1934), XCIX (Oct. 18, 25, Nov. 8, 15, 22, 29, 1934), C (Apr. 4, 1935); A.N.P.A. Bulle-

202

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tin, No. 6413 (May 7, 1 9 3 5 ) , pp. 3 0 2 - 3 ; N . Y . Times, Oct. 1 1 , 14, 23, Nov. 6, 8, 14, 17, Dec. 20, 1934, Jan. 17, 24, 1 9 3 5 ; Guthrie, of, cit., pp. 98-9. 20. Pafer Trade Journal, C (Apr. 18, M a y 16, 1 9 3 5 ) , C I (Nov. 28, Dec. 19, 1 9 3 5 ) , C I I (Jan. 16, Feb. 6, 1 9 3 6 ) ; A.N.P.A. Bulletin, No. 6413 ( M a y 7, 1 9 3 5 ) , p. 304; N . Y . Times, Apr. 14, 27, M a y 1, 3, i i , 17, June 12, 1 9 3 5 ; Guthrie, o/>. pp. 110—2. T h e Canadian industry operated throughout 193 5 at 7 1 . 2 % capacity. 21. Pafer Trade Journal, C I (Aug. 8, Nov. 21, 1 9 3 5 ) ; United States Tariff Commission, The Trade Agreement with Canada, Refort No. in, Second Series (Washington, 1 9 3 6 ) , pp. 5, 65—6. 22. Pafer Trade Journal, C I I (Feb. 20, Mar. 5, Apr. 30, 1 9 3 6 ) ; A.N.P.A. Bulletin, No. 6580 (May 1, 1 9 3 6 ) , pp. 328-9, 338. 23. Pafer Trade Journal, CII (May 7, 1 9 3 6 ) , C I I I (Aug. 6, 13, Nov. 26, 1 9 3 6 ) ; A.N.P.A. Bulletin, No. 6706 (Apr. 30, 1 9 3 7 ) , p. 3 1 5 . As early as July, 1935, a United States Government report supported the possibilities of southern yellow pine for producing mechanical pulp. National Pulf and Pafer Requirements in Relation to Forest Conservation: Letter jrom the Secretary of Agriculture Transmitting in Response to Resolution No. 205 (73d Congress) a Refort on National Pulf and Pafer Requirements in Relation to Forest Conservation, Senate Document 115, 74th Congress, 1st Session, p. 2. 24. Pafer Trade Journal, C I V (Jan. 21, Feb. 4, 1 1 , 18, 25, Mar. 25, Apr. 1, 1 9 3 7 ) ; A . N . P . A . Bulletin, No. 6706 (Apr. 30, 1 9 3 7 ) , p. 310. 25. A . N . P . A . Bulletin, No. 6706 (Apr. 30, 1 9 3 7 ) , pp. 3 1 1 , 3 1 8 ; Pafer Trade Journal, C V (Oct. 21, 28, Dec. 9, 1 9 3 7 ) , C V I (Feb. 24, 1938). 26. Pafer 1939)-

Trade Journal, C I V (Feb. 25, 1 9 3 7 ) , C V I I I (Feb. 23,

BIBLIOGRAPHY Averill, W . A. Prices of Paper (Pamphlet). Washington, 1919. Bryn-Jones, David. Frank B. Kellogg: A Biography. N e w York: G . P. Putnam's Sons, 1937. Bulletin of the American Newspaper Publishers' Association. Published in several series and numbered consecutively, citation is by number, date, and page, or by number and date when pagination is omitted. Canadian Tariff Negotiations: EXCEPTIONALLY CONFIDENTIAL, TO BE F I L E D AS A CONFIDENTIAL D O C U M E N T AND ISSUED ONLY U P O N W R I T T E N ORDER OF T H E SECRETARY OF STATE.

THE

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lations. N e w Haven: Yale University Press, 1939. Foreign affairs committee, house, exportation of pulpwood from Canada to United States, hearings on S. J. Res. 152, authorizing the appointment of commission to confer with Dominion government or provincial governments

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certain restrictive orders in council of said provinces relative to exportation of pulpwood therefrom to United States, March 9 — April 27, 1920. Foster, Joan V. M . "Reciprocity and the Joint H i g h Commission of 1898—9," The Canadian Historical Association: Report of the Annual Meeting

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Guthrie, John A. The Newsprint Paper Industry. An Economic Analysis. Cambridge: T h e Harvard University Press, 1941. Harlow, Ralph V. The Growth of the United States, Vol. II. New York: Henry Holt Co., 1943. Hearings before the Committee on Finance, United States Senate on the Proposed Tarif Act of 1921 (H. R. 7456). Senate Document 108, Sixty-Seventh Congress, Second Session. Industrial Advisors Report on Recommendation Authority. Statement by C. R. McMillen,

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Advisory Board in Connection with the Hearing on Recommendations of Newsprint Code Authority under the Code of Fair Competition Relating to the Newsprint Industry. February 7, 1934. Printed pamphlet bound in Newsprint Recommendations, Vol. A, in Records of the National Recovery Administration, T h e National Archives, Washington. Johnson, Allen, and Malone, Dumas (editors). The

Dictionary of

American Biography. 21 Vol. New York: Charles Scribner's Sons, 1928-1944. Jones, Edward R. Paper Industry Study. Department of

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Office of National Recovery Administration. Manuscript study of the operation of the newsprint industry under N R A in Records of the National Recovery Administration, T h e National Archives, Washington. Kellogg, R. S. The Story of News Print Paper. New York: T h e News Print Service Bureau, 1936. Letter from the Attorney-General,

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National Pulp and Pafer Requirements in Relation to Forest Conservation: Letter jrom the Secretary of Agriculture Transmitting in Response to Resolution No. 205 (73d Congress) a Re fort on National Pulf and Pafer Requirements in Relation to Forest Conservation. Senate Document 1 1 5 , Seventy-Fourth Congress, First Session. Newfoundland

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Knox Papers, Library of Congress. Newsprint paper industry, hearings before subcommittee pursuant to S. Res. 164, authorizing Committee on Manufactures to investigate newsprint paper industry, 1920. No document number assigned. Newsprint Paper Industry. Letter from the Chairman of the Federal Trade Commission Transmitting, in Response to Senate Resolution 337 {.70th Congress), A Report on Certain Phases of the Newsprint Paper Industry. Senate Document 2 1 4 , Seventy-First Congress, Special Session of the Senate. News-Print Paper Industry: Letter from the Federal Trade Commission Transmitting in Response to a Senate Resolution of April 24, 1916, a Report Relative to an Investigation of the News-Print Paper Industry of the United States. Senate Document 3, Sixty-Fifth Congress, Special Session of the Senate. (A preliminary report) News-Print Paper Industry: Letter from the Federal Trade Commission Transmitting Pursuant to a Senate Resolution of April 24, 1916, the Final Report of the Commission Relative to the News-Print Paper Industry in the United States. Senate Document 49, Sixty-Fifth Congress, First Session. News-Print Paper Investigation". Reply of the Federal Trade Commission to Resolution No. 95 of the Senate. Senate Document 6 1 , SixtyFifth Congress, First Session. Newsprint Recommendations, Volume A, B, B-i. In Records of the National Recovery Administration, The National Archives, Washington. The New York Times. New York, 1 8 5 1 ff. New-York Tribune. New York, 1 8 4 1 ff. Notes on Tarif Revision, Prepared for the Use of the Committee on Ways and Means of the House of Representatives. House Document 1 5 0 3 , Sixtieth Congress, Second Session.

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izing the Secretary of Agriculture to Make a Survey of Pulp Woods on the Public Domain and to Prepare a Plan for the Reforestation of Pulp-Wood lands and appropriating the sum of $ 1,000,000 for these Purposes. Senate Document 234, Sixty-Sixth Congress, Second Session. Synopsis of Sundry Decisions Rendered

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Department

under the Tariff and Other Acts, During the Year Ending ber ¡1,

Decem-

1872. Washington, 1873.

Tariff Acts Passed by the Congress of the United States from 1789 to 1897, Including All Acts, Resolutions, and Proclamations or Changing Those Acts. House Document

Modifying

562, Fifty-Fifth Con-

gress, Second Session. Tariff Hearings before the Committee sion, Fifty-Third

Congress. House

on Ways and Means. First SesMiscellaneous

Document

43,

Fifty-Third Congress, First Session. Tariff Hearings before the Committee Session, Fifty-Fourth

on Ways and Means.

Congress. 1896-97.

2 Vol. House

Second

Document

338, Fifty-Fourth Congress, Second Session. Tariff Hearings before the Committee on Ways and Means of the House

208

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of Representatives, Sixtieth Congress, 1908—1909. Document 1505 Sixtieth Congress, Second Session.

PENDULUM 9 Vol. House

Tarif Information Surveys on the Articles in Paragraph 322 of the Tarif Act of 1913 and Related Articles in Other Paragraphs. Washington, 1 9 2 1 . Tarif Schedules. Hearings before the Committee on Ways and Means House of Representatives. House Document 1447, Sixty-Second Congress, Third Session. The Theodore Roosevelt Papers. The Library of Congress. The William Howard Taft Papers. T h e Library of Congress. United States Tarif Commission. Reciprocity with Canada". A Study of the Arrangement of 1911. Washington, 1920. United States Tariff Commission. Summary of Tariff Information, 1929, on Tariff of 1922. Washington, 1929. United States Tariff Commission. Tariff Information Surveys on the Articles in Paragraph 322 of the Tariff Act of 1913 and Related Articles in Other Paragraphs. Printing Paper. Washington, 1 9 2 3 . United States Tariff Commission. The Trade Agreement with Canada. Report No. 111 Second Series. Washington, 1936.

INDEX A b i t i b i P o w e r and P a p e r Co., Ltd., 133, 144, 193 Addystone Pipe Case, 33 Adler, E. P., 137, 139, 147 Agriculture, Department of, 113 A l a s k a , 113 Aldrich, Nelson W . , 59-63 Allen, Loren, 14 Allison, W i l l i a m B., 23 American Newspaper Publishers' Association, 8, 18, 20, 30, 36, 38, 40, 42-5. 49. So, 59, 6°. 67, 72, 74, 75. 81, 82, 84, 85, 87, 88, 9 1 100, 105-7, I I 0 > 114-6, 122, 124, 126, 132, 134, 136-9, 143-6, 149, 150, 155. 157-62, 164, 165, 167, 168, 171, 174-8, 180, 183, 184, 191-7, 200 A m e r i c a n P a p e r and Pulp Association, 45, 46, 50, 59, 128, 169, 170, 173, 178, 183, 184, 198 A m e r i c a n Paper Makers' Association, 11, 14 American Paper Manufacturers' Association, 173 A m e r i c a n Press Association, 117 A m e r i c a n Protective T a r i f f League, 81 A n g l o - C a n a d i a n Pulp and Paper Co., Ltd., 134-6, 200 Ansberry, T . T . , 98 Anti-trust l a w s and newsprint, 7, 8, 32. 36-8, 41, 72, 90, 92, 99102, 104, 107, 118, 139, 140, 159, 170. See alio : Clayton A c t ; Combination and monopoly in manufacture and sale of newsprint; Federal Trade Commission; and Sherman Act. Associated Press, 34, 36, 48

Backus, 194

Edward

W.,

104,

193,

Baldwin, H. E., 29 Baltimore American, The, 115 Baltimore Sun, The, 117 Barnjum, Frank J. D., 127, 128, 198 Beaverbrook, Lord, 152 Beck, James M., 34 Belgo-Canadian Pulp and P a p e r Co., 61, 149, 190, 193 Berry, M a j o r G e o r g e A., 160 Bonaparte, Charles J., 36, 39, 41, 181-3 Boutwell, George S., 12, 173 British Columbia, 85, 86 Brompton Pulp and Paper Co., Ltd., 133-6 Brooks, Erastus, 12, 13 Brown, Elon R., 86 Brown, Norris, 60, 61, 63 Bryan, W i l l i a m Jennings, 45, 178, 184 Burbank, A . N., 41, 51 Butler, E. H., 144, 145

V j a h o o n , George, Jr., 193, 194 Canada, Department of External Affairs, 122, 127 Canada, newsprint policy. See Newsprint, C a n a d i a n policy. C a n a d a , pulpwood exportation restrictions. See Pulpwood, C a nadian export restrictions. C a n a d a , reciprocity with. See Reciprocity, Canadian. C a n a d a , removal of paper and pulp industry to, 6, 20-4, 26-9, 51-5. 57. 58, 61, 69, 70, 75, 84, 88-90, 119, 125, 127, 131, 185, 188 Canada, trade treaty with France, 72, 73 C a n a d a P o w e r and Paper Corporation, Ltd., 149, 150, 200

INDEX

2X0 C a n a d i a n Club of Montreal, 168 C a n a d i a n Export P a p e r Co., Ltd., 133 C a n a d i a n Lumbermen's Association, 27 C a n a d i a n Manufacturers' Association, i S3 C a n a d i a n Newsprint Co., 133, 134 C a n a d i a n Paper Sales Co., Ltd., 133 C a n a d i a n policy, newsprint. See Ferguson, G . H o w a r d ; International Paper C o . ; Mergers in C a n a d i a n newsprint industry; Ontario, paper and pulpwood policy; Price of newsprint; Quebec, paper and pulpwood policy; Royal Commission to investigate Canadian newsprint a f f a i r s ; and Taschereau, L. A . C a n a d i a n production control, 132, 133. 135. 136. 138. 140. 142. 143. 145-53 C a n a d i a n Pulp and Paper Association, 130, 131 C a n a d i a n sales methods, 133 Cannon, Joseph G., 41-4, 60, 70, 71, 183, 187 Chandler, W . G., 144, 146, 147, 'Si Chicago Journal, The, 137 Chicago Tribune, The, 36 Chisholm, Hugh J., 26, 30, 32, 180 Clayton Act, 159 Cleveland, G r o v e r , 15 Code of Fair Competition, 154, '5^, IS7t lf>°, >2 Colby, Bainbridge, 102, 161 Colver, W i l l i a m B., 109 Combination and monopoly in manufacture and sale of newsprint, 7, 8, JO, 14, 19, 20, 24, 25, 29-32, 34, 37-9, 41-3, 46-54, 56. 93-6, 99-102, i°4, 107, 114, 117, 118, 139, 140, 158, 161, 177-9, 181, 193. See also M e r g ers in C a n a d i a n industry. Commerce, Secretary of, 116

Commerce and Labor, Department of, 31. 32. 41, 105. 180 Conservation of newsprint and pulpwood, 37, 38, 53-7, 127, 129, 183 Consolidated Paper Corp., 200 Converting mill, 4, 5 Corporations, Bureau of, 41 Corporations, Commissioner of, 74 Cost of production, 59-61, 66, 83, 98, 101, 103, i n , 155, 157, 158, 164, 190 Cowles, D a v i d S., 43, 45, 47, 50, 53, 182 C r o w n lands, wood and paper products from, 5, 67, 73, 75, 86, i i 2 , 119-22, 165, 179, 185, 188, 189

D a l z e l l , John, 177 Davenport Times, The, 137 D a v i s , Howard, 161 Democratic platform of 1908, 45 Depression, 140, 145 Digester, 4 Dingley T a r i f f , newsprint and wood pulp aspects, 20-4, 28, 29, 44, 175-8, 182 Dodge, Philip T . , 91, 95, 101, 130, 193, 194, 197 Dominion Marketing Act, 164, 166 Donovan, W i l l i a m J., 140

E l e c t i o n of Election of Election of Emergency Everest, D.

1910, 71, 76 1912, 85, 86 1932, 140 T a r i f f Act, 126 C., 169

F e d e r a l T r a d e Commission, 94111, 118, 193, 194 Federal T r a d e Commission Act, 159 Ferguson, G . H o w a r d , 135, 136, 142-4 Fiber and manila pool, 39, 40

INDEX

211

Fielding, William S., 22, 77, 189 Finnish newsprint, 152, 190 Fletcher, Duncan U., 96 Fordney-McCumber Tariff, 123, 126t 127 Foulke, William Dudley, 186 Fourdrinier paper machine, 5 France, trade treaty with Canada, 72, 73 Frye, William P., 17, 61, 65, 182 G a l l i n g e r , Jacob H., 17, 61 Garfield, James A., 174 Gaylord, E. K., 139 General Paper Co., 29-33, 180 George H. Mead Co., Ltd., 115, 133 Glass, F. P., 95, 96, i o i , 102, 105, 116, 139, 140, 147 Gold standard, 152 Gouin, Sir Lomer, 60, 67, 71, 73, 187, 188 Gould, G. H. P., 104, 107, 193 Graustein, A . R., 130, 131, 136, 138, '39, 143-5. 156» 199 Great Northern Paper Co., 30-2, 107, 165, 167-9, 179, 193 Gregory, T . W., 99, 108 Groundwood pulp. See Wood pulp, mechanical. H a l e , Eugene, 60, 61, 65 Hamilton Spectator, The, 147 Hamlin, Conde, 30, 33 Hammond, W . S., 87 Hanson, Elisha, 155, 158-61 Harding, Warren G., 123 Hardwick, Thomas W., 110 Hartford Courant, The, 115 Harvester Trust, 104 Haskell, W . E., 121 Hastings, Arthur C., 45, 47, 53, 54, 56. 57, 79. 86, " 8 Hawley-Smoot Tariff, 165 Hearst, William Randolph, 125, 134. 149 Hearst press, 115, 133, 164

117,

Heenan, Peter, 166 Heney, Francis J., 102, 103 Hitchcock, Gilbert M., 177 Hotaling, H. C., 122 Houde, Camillien, 148 Howard, Roy, 106 Hudson Falls, N. Y., 47 Hughes, Charles E., 128, 129 Hull, Cordell, 165 Hurlbut, William N., 133 Hurley, E. N., 97 Hutchins, W . S., 29 Hyman, Mark, 102

Industrial Commission, 30 Insurgents, and tariff and reciprocity, 71, 81, 84 Integrated paper mill, 5 "International Fair Play," 119, 120 International Paper Co., 9, 14, 18, 24-6, 29, 31-s, 41, 47, 48, 50, 5i. 59, 7i. 74. 87, 90-2, 95, 97, 101, 106, 121, 130, 134-9, 141, 143-5. 147-50, 152, 153, 157, 164, 168, 178-80, 185, 193, 197-9 International Paper Co. of Canada, Ltd., 125, 130, 131

Johnson, General Hugh S., 155, 156, 160 Joint High Commission, 26-8 Joliet Nevis, The, 29 Jones, Edward R., 162, 163, 201 Jones, George, 12, 13 Jones, H. V., 187 Justice, Department of, 33, 34, 37, 99-102, 104, 181, 193

K e l l o g g , Frank B., 34, 108 Kellogg, R. S., 158, 172, 196 Ker, F. I., 147 King, William Lyon Mackenzie, 128 Knight case, 14 Knox, Philander C., 77-80

212

INDEX

1 Mills Tariff Bill, 15, 16, 175 L a F o l l e t t e , Robert M., 61, 62, 65, ' Minnesota and Ontario Co., 150 116 Mongrel Tariff of 1883, 15, 175 Laurentide Paper Co., 133, 149, Monopoly in manufacture and sale 190 of newsprint. See Combination Laurier, Sir Wilfrid, 21, 22, 177, and monopoly in manufacture 187, 188 and sale of newsprint. Lawson, Victor, 184 Moses, George A., 198 Leupp, Francis E., 186 Most-favored-nations, 85, 165 Lever Food Control Act, 118 Munsey, Frank, 117 Liberty Loan, 112 Lilley, George L., resolution on price of newsprint, 31, 32, 180 N a t i o n a l Editorial Association, Location tickets, 75 122, 195 Lodge, Henry Cabot, 88 National Industrial Recovery Act. Lyman, Chester W., 32, 47, 51, 53, See NIRA. 59, 71, " 7 National Recovery Administration. See NRA. New Brunswick, 132 M c C a l l , Samuel W., 80, 189 New Deal. See: Code of Fair McCall Bill, 80, 81 Competition ; Johnson, General McCormick, Medill, 36, 48, 49, Hugh S.; Newsprint Code Au184, 187 thority; NIRA; NRA; and SupMclntyre, A. G., 97 plemental Code. McKelway, St. Clair, 190 Newfoundland, 75, 149 McKinley Tariff, 16, 17 Newspaper and Magazine Paper McMillen, Hugh R., 155, 159, 201 Mann, James R., 43, 44, 46-52, 58, Corporation, 133-9, J 43 Newspaper Code, 161 62, 65-8, 70, 88, 182, 184, 187 Newsprint, definition of, 3 Mann Bill, 72, 74, 76, 78 Newsprint Association of Canada, Mann Committee, 39, 42-4, 46-63, 168 67, 68, 70, 72, 180, 182, 184, 185 Manufacture, process of, 3-5 Newsprint Code Authority, 154, Manufacturers, 6-8, 13-15, 18-20, 156-8, 160, 161, 163 32, 50-2, 54, 55, 58, 79, 84-7, 90, Newsprint Conservation Commit92-104, 107, 108, 111-3, 115, 117, tee, 126 Il8, 121, 122, 146, 147, 149, 151, Newsprint Export Manufacturers' 154-60, 162-75, 183-5, 188, 193-6. Association, 156 See also American Paper and Newsprint Institute of Canada, Pulp Association. Ltd., 136, 141, 143-7, 149-51, Manufactures, Committee on, 113, 153, 199 116 Newsprint Manufacturers' Association, 93-5, 97, 104, 107, 108, Mead, George H., 193, 194 193, 196 Mergers in Canadian industry, Newsprint Manufacturers of the 133. 135. 145-7, 149-53, 166 United States, 154-6 Michigan League of Home Dailies, Newsprint Planning and Adjust158 ment Board, 160 Miller, Warner ("Wood-pulp"), Newsprint Service Bureau, 115, 12, 13, 15, 20, 27, 28, 174, 175, 196, 197 177, 178

INDEX New York Express, The, 1 2 Ne